Analysts widely believe that the dollar’s status as the world’s primary reserve currency is safe for the time being, as it is held by more central banks and significant financial institutions for international transactions and investments than any other currency, but its domination is increasingly being challenged.
China is outperforming the US in terms of online money innovation, posing a threat to the dollar’s standing as the de facto monetary reserve, CNBC reported, citing researchers from the Federal Reserve Bank of Boston and MIT’s Digital Currency Initiative.
According to the report, a CBDC, or Central Bank Digital Currency, a regulated type of money that exists exclusively online, is being developed by around 80 countries, including China and the US. And more than a million Chinese citizens have reportedly already received their digital yuan, but the US is still primarily focused on research.
The two groups of researchers have been entrusted with figuring out what a digital currency may look like for Americans. And according to the news outlet, the development of a CBDC in the US is intended, in part, at ensuring that the dollar remains the world’s monetary leader.
“The United States should not rest on its current leadership in this area. It should push ahead and develop a clear strategy for how to remain very strong and take advantage of the strength of the dollar,” Darrell Duffie, professor of finance at Stanford University’s Graduate School of Business is quoted in the report as saying.
There are some very serious considerations about what a digital currency might look like, and its accessibility is considered a major issue.