President Biden today signed a long-awaited executive order directing government agencies to take “concrete steps” to advance the use of digital assets, including further exploration of a possible U.S. central bank digital currency, or CBDC. The order calls on the Fed to continue its ongoing work in this area, and calls for “placing urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest.”
In addition, the order directs the Treasury Department and other agencies to develop policy recommendations to address the growing digital asset sector and ensure consumer protection; directs the Financial Stability Oversight Council to identify and mitigate systemic risks related to digital assets; and calls for a whole of government approach to direct “unprecedented focus” to mitigate illicit finance and national security risks posed by illicit use of digital assets.
The order also focuses on driving U.S. leadership and competitiveness in developing and using digital asset technologies, and calls for a Treasury report on the future of money and payment systems, including implications for economic growth and financial inclusion, among other things.
As policy conversations continue regarding the creation of a U.S. CBDC, the American Bankers Association has raised concerns that the creation of such a currency could compete with bank deposits and limit banks’ ability to power economic growth.
“While much of the executive order calls on federal agencies to assess the expanding marketplace of digital assets before recommending new rules, we are concerned that it clearly directs federal agencies to begin pursuing a central bank digital currency even before determining if a U.S. CBDC is actually ‘in the national interest’ as the order also requires,” said ABA President and CEO Rob Nichols. “We urge the administration and the agencies involved to carefully consider the implications of a U.S. CBDC, which could fundamentally reshape our banking and payments system to the detriment of bank customers and their communities.”
