A proposal under consideration in the U.S. Senate would create a new dollar-backed digital currency. Theoretically, this could represent a public policy twofer—simultaneously keeping the country competitive as the nature of money evolves and creating a financial platform that in times like these could speed much-needed payments to citizens through digital wallets managed by the Federal Reserve. The proposal was stripped from the most recent stimulus package, but support for a “digital dollar” was building long before the coronavirus pandemic and is sure to continue when it is over. For now, any adoption of such technology is far off for the United States. But with China appearing to be close to issuing its own digital yuan and many private-sector initiatives also underway to digitize currency, how important is a digital dollar in keeping the country competitive?
ITIF's Center for Data Innovation hosted a discussion on the challenges and opportunities of establishing a digital currency in the United States.