Who is and who isn't working on a state-backed digital currency?
What you need to know
China is pushing full steam ahead with its state-backed digital currency. But while it may be the first of the major economies to launch its own crypto, it’s unlikely to be the last.
Russia, Iran and the U.K. have all revealed that they’re studying the option intently. Countries around the world are beginning to view a central bank digital currency as a viable alternative to cryptocurrency, a global counterbalance to the dominance of the U.S. dollar and a long-overdue step into a more efficient, digital world.
Meanwhile, the U.S.—proud issuer and possessor of the dollar, the most stable and highly traded currency on the planet—is strangely quiet on the issue. What gives?
Why it's important
Proponents argue that, aside from the potential to improve on the transparency and efficiency of paper currencies, a national crypto could also give the Fed access to unconventional tools, like negative interest rates.
And a recent study by a Washington D.C.-based policy institute, the Foundation for the Defense of Democracies, has warned that a national digital currency issued by a nation such as China, Russia or Iran—particularly one tied to a major commodity, such as oil—may make any sanctions much harder to enforce. Washington, it said, needs to “cultivate the expertise and influence to lead in what is becoming an international crypto race.”
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