With respect to the stirring rumor that the cryptodollar may soon be established, as China is doing, Morgan Creek co-founder, Anthony Pompliano, has advised the Federal Reserve System (FED) to digitize the United States’ currency.
Pomp said the American crypto community is currently discussing the information that the FED may submit a plan to digitalize the dollar this week. A post about this appeared on the specialist’s Twitter handle.
“This would be similar to China’s effort to digitize the yuan. Whether the rumor is true or not, the Fed should absolutely digitize the dollar,” posts Anthony Pompliano on his Twitter.
The specialist links a video in which he discusses the lack of tokenization of the US national currency. The latter will help the United States respond to the issue of the digital renminbi in his opinion.
Rumors are circulating that the Fed is going to announce an effort to digitize the dollar this week.
This would be similar to China's effort to digitize the yuan.
Whether the rumor is true or not, the Fed should absolutely digitize the dollar.
Here is why: pic.twitter.com/8xvozAtFZr
— Pomp 🌪 (@APompliano) January 15, 2020
Note, the idea of creating a digital US dollar has been discussed at the government level since the fall of 2019. The answer to China’s digital currency is also the stablecoin Libra. According to Mark Zuckerberg, Facebook CEO, the United States should not allow China to win the digital asset launch rally. The expert believes if China is ahead of America, it will get an audience of 1.7 billion potential users.
The release of Libra is currently at a risk. Facebook’s crypto project has faced regulatory pressure. Despite this, according to the vice president of the blockchain division of Facebook, Calibra, Kevin Weil, employees of the social network are already using the stablecoin.
Recall that in November 2019, the partner of the Proof of Capital venture fund Edith Cheung said that the digital yuan could be launched within a year.
According to some experts, Wechat and Alipay will be engaged in the spread of Chinese cryptocurrency. Representatives of the Chinese Central Bank position the national digital currency as an asset for mutual settlements. The regulator argues that digital yuan will not be a speculative tool.
Recall that in parallel with the development of CBDC in China, representatives of the European Union are also engaged in the formation of their own digital currency.
Advantages and Disadvantages of CBDC
Earlier, experts of the International Monetary Fund (IMF) spoke about the potential use of digital currencies of the Central Banks (CBDC) and the risks of using a new financial instrument.
IMF experts believe that the following points can be attributed to CBDC’s strengths:
- Lower transaction costs;
- Ease of getting started. Users do not need to open a bank account to interact with CBDC;
- The possibility of implementing additional measures to counter economic crises.
Researchers also identified several CBDC risks, among which are the following:
- Possible entry into competition with commercial banks, against the background of withdrawal of deposits from the latter;
- Risks of interference with issues related to government lending decisions;
- Potential increase in the amount of foreign currency, due to the possible release of CBDC by other countries.
Recall, earlier, IMF experts concluded that digital money could remove fiat.