Wall Street Demands A Delay In The Launch Of Digital Dollar

 Wall Street Demands A Delay In The Launch Of The Digital Dollar

Wall Street banks have asked the US government to delay the launch of the digital dollar, given the risks of issuing a Federal Reserve-backed virtual currency to withdraw hundreds of billions of dollars from the banking system.

Wall Street Demands A Delay In The Launch Of The Digital Dollar

It is noteworthy that the central bank-backed digital currency (CBDC) is a direct competitor to private bank deposits, and also reduces the amount of credit available to finance companies and individuals, according to the American Bankers Association and the Institute for Banking Policy.

Institute, as part of the lobbyist's response to the Federal Reserve's January discussion paper, which outlined the potential advantages and risks of launching a new virtual currency project.

The truth about the benefits of a digital dollar

In a letter to the Federal Reserve on May 20, the American Bankers Association said: 

As we assess the potential effects of issuing a central bank-backed digital currency, it has become clear to us that the purported benefits of its issuance are uncertain and unlikely to materialize, while the costs The implications are real and big.

According to this analysis, we do not consider the issuance of a central bank-backed digital currency in the United States to be necessary at this time, the association added.

The prospect of a US Federal Reserve-backed digital currency has become a hot issue in Washington, especially after the market capitalization of cryptocurrencies soared to more than $1 trillion, and so-called stablecoins raised the concerns of regulators and lawmakers.

Cryptocurrency release forecast

The White House said in March in an executive order on its crypto -a policy that it was giving the "highest priority" to research and development potential for digital dollar issuance.

While proponents of the Fed-backed digital currency argue that it helps ensure dollar dominance, especially as countries like China seek to issue their own digital currency, Wall Street lobbyists say the move could backfire.

For example, the Institute for Banking Policy said in a separate letter on May 20 that digital dollars could dry up major sources of funding in banks by withdrawing deposits from banks.

particularly during a period when the economy is under stress, so it is likely that a backed digital currency will undermine than the central bank's performance of the US banking system, and significantly reduce the availability of credit in the economy.

Business groups said that even if banks and other financial institutions acted as intermediaries, they would not be able to use the money customers would put into central bank-backed digital currency accounts to fund loans and other investments in the economy.

Banking policy,” that the digital currency has become a direct obligation on the “Federal Reserve,” unlike deposits in commercial banks.

In addition, the pressure groups ruled out that setting a cap on digital currency accounts backed by the central bank would not contribute to reducing the repercussions significantly, and the “American Bankers Association” expected that setting a cap of $2,500 would lead to the withdrawal of deposits from traditional banks worth 446 billion. dollars and this figure will jump to a trillion dollars if the ceiling is increased to 10 thousand dollars.

Controversy over cryptocurrency

The report emphasized that investors who own cryptocurrencies with disproportionately high incomes, about 46%, had an annual income of $100,000 or more, about 89% of those who did not retire had retirement savings, and about 29% had an income of less than $50,000.

Also, the survey showed that nearly 60% of these users have an income of less than $50,000, about 20% have an income of less than $25,000, only about 24% have an income above $100,000, and about 13% do not have a bank account, and this Compared to about 6% of American adults who lacked a bank account, about 27% of those who used cryptocurrency for transactions did not have credit cards.

Earlier, a state of controversy prevailed in the US Congress over a stable digital currency, as the US Senate Committee on Banking, Housing and Urban Affairs organized a hearing, in which US Treasury Secretary Janet Yellen drew attention to the recent collapse of the stablecoin Terra.

The US Treasury Secretary stated that the UST stablecoin has come a long way and has depreciated recently, which simply shows that this digital currency is a fast-growing product, there are risks to financial stability and we need an appropriate framework.

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