Tuesday, February 4, 2025
Year : 2, Issue: 23/strong>
Anadolu Agency: President Donald Trump’s ban on a “digital dollar” has further set the US back in the race for digital currency, as China and the EU continue advancing their own central bank digital currencies (CBDCs).
Trump signed an executive order titled “Strengthening American Leadership in Digital Financial Technology” on Jan. 23, which establishes a working group on digital asset markets, including cryptocurrencies, within the National Economic Council, while prohibiting American institutions from developing, issuing, or using CBDCs.
The order argues that a CBDC would threaten financial stability, individual privacy, and US sovereignty, fueling debate among financial experts and cryptocurrency advocates.
With the order preventing the Federal Reserve from creating a digital dollar, the US risks falling further behind in the fintech race.
The US is now the first country to ban its central bank from developing a digital currency, despite the Fed’s previously cautious approach to digitizing the dollar.
Experts say the move allows China and the EU to solidify their leadership in financial technology.
The long-term consequences of Trump’s decision remain uncertain, but failing to keep pace could weaken the global standing of the US dollar.
Unlike cryptocurrencies, CBDCs are issued and backed by central banks, whereas crypto assets like Bitcoin are decentralized and maintained by a global network of computers.
Central banks worldwide, particularly the European Central Bank (ECB) and the People’s Bank of China (PBoC), are developing digital currencies and payment systems. Meanwhile, cryptocurrencies and stablecoins, such as the US dollar-pegged Tether (USDT), continue to grow in popularity.
As of September 2024, 134 countries and currency unions—accounting for 98% of the global economy—were researching CBDCs, according to data from the Atlantic Council, an American think tank. The US was among them, but Trump’s executive order has now altered its position. In May 2020, only 35 countries were studying digital currencies.
