Digital dollar’s values to fortify USD hegemony(ft. David Treat & Christopher Giancarlo)
The Digital Dollar Project — a private sector initiative by the Digital Dollar Foundation and Accenture — recently became a late entrant to the central bank digital currency (CBDC) testing grounds, announcing at least five pilots within the next year. But the United States Federal Reserve has yet to commit to the launch of a digital dollar, widening the gap between the US and other central banks — including China — in CBDC developments. Beijing, having already launched numerous pilot projects in various forms for its CBDC, now officially known as the e-CNY, has a seven-year lead against the US in the global CBDC race. “I would push aside the race analogy, but I would say there’s a contest,” former Commodities Futures Trading Commission chair and founder of the Digital Dollar Foundation, J. Christopher Giancarlo, told Forkast.News in a video interview. “The winner of the contest is the nation that successfully incorporates into a digital currency their societal values.” Fed chair Jerome Powell also brushes aside the race analogy, voicing the importance of getting a digital dollar “right” rather than “first.” But U.S. dollar dominance is dwindling. A recent International Monetary Fund (IMF) report found that global reserves of the U.S. dollar sunk to a 25-year low of 59%, numbers not seen since 1995. But Giancarlo says that a digital dollar carrying the values of a democratic society could strengthen the dollar’s position as world reserve currency. “We may see a world in which you’ve got a digital dollar, hopefully — and if we get it right carrying those [democratic] values — competing against currencies of non-democracies that carry different values with them, values of state, surveillance of government, control of financial markets [and] of social credit systems,” Giancarlo said. “The dollar could reemerge once again as — well, it is today, the reserve currency — but even more so because of those democratic values built-in compared to the alternatives.” Accenture’s senior managing director David Treat discussed some aspects of how the Digital Dollar Project will explore some of these democratic values including benefits distribution. This being a controversial topic in the current U.S. financial structure, highlighted by a perceived lag in issuance of stimulus checks during the Covid-19 pandemic. “Part of what we’re going to explore [are] the various options against a backdrop of not having a national ID system, which is also part of our core societal values,” Treat said. “That ability to actually pair a stablecoin that can embed that business logic into it and to be able to guide what is spent and what is not spent on, paired with a central bank digital currency, we see as a powerful combination and one that's certainly worth exploring.” As for the current state of the Digital Dollar Project and its five pilots in the coming year, Treat revealed the project is currently selecting appropriate players in the industry to lead the initiatives. “We’re in the midst of picking the captains for each one of the pilots,” Treat said. “Very intentionally, when you think about the financial inclusion, the unbanked and underbanked, there may be some maybe some really, really important small local players that we announce.”