The former Chair of the Commodity Futures Trading Commission, J. Christopher Giancarlo, has partnered with Accenture for a thing called the Digital Dollar Project.
Digital Dollar Project
The DDP will focus on getting a real digital dollar asset created, as opposed to what traders have today in the form of stablecoins.
The asset is formally known as a Central Bank Digital Currency or CBDC. Giancarlo said in a press release from Accenture:
A digital dollar would help future-proof the greenback and allow individuals and global enterprises to make payments in dollars irrespective of space and time. We are launching the Digital Dollar Project to catalyze a digital, tokenized U.S. currency that would coexist with other Federal Reserve liabilities and serve as a settlement medium to meet the demands of the new digital world and a cheaper, faster and more inclusive global financial system.
Giancarlo’s initiative is non-profit and according to the same press release, it aims to “encourage research and public discussion on the potential advantages of a digital dollar, convene private sector thought leaders and actors, and propose possible models to support the public sector.”
The actual benefits of a digital fiat asset are unknown at present, as no one has broached the subject yet around the world. Several countries are threatening to get it done ahead of the west, including China.
Stablecoins, which are similar to what a digital dollar would be, are used by traders for a variety of purposes. Unlike regular cryptocurrencies, stablecoins are linked to the value of a fiat asset, such as the dollar or the Euro.
As such, when the value of a cryptocurrency changes, the value of a stablecoin stays the same. Traders find them valuable for moving money between exchanges, as well as pushing pause on trading.
Central Bank Digital Currency
All you have to do is move your money into a stablecoin, for example, and you no longer have to worry about the volatility of your assets.
A CBDC could serve numerous purposes as well. For one thing, would you be able to simply download a wallet for your phone or computer in order to use the digital dollar? Would this become a common way of getting paid, and paying? What would become of existing digital dollar systems, such as Visa and Mastercard?
Without a doubt, a fiat digital dollar would change pretty much everything, especially if it were more than a digital IOU.
That’s essentially all that stablecoins are at this point: IOUs.
You pay into the stablecoin with either a cryptocurrency or even fiat currency, and then you get back what you paid in the form of stablecoins.
If that’s all that digital dollar does, then that wouldn’t be much to worry about. But it could greatly disrupt a lot of other areas of finance, including lending and banking. Imagine if all of a sudden, pretty much everyone banks on their phones, and transacts in a digital currency, issued by the US treasury?
That would seem to be the vision of the CBDC. What’s unclear is how it would impact the rest of society. That’s part of what Giancarlo’s Digital Dollar Project is all about.
Whatever happens, the digitization of finance is fast approaching.
