Treasury Department developing tech for digital dollar as Congress debates crypto rules

The Biden administration is working to develop technology to help create a central bank digital currency (CBDC) as the policy debate as to how to do so continues, a Treasury official said Wednesday. 

Nellie Liang, Treasury under secretary for domestic finance, gave the update as part of a speech about how the administration is advancing plans for a potential CBDC.

A CBDC would be used to issue a digital version of currency, meaning in the U.S. that the Federal Reserve would issue a digital dollar that could be used the same way regular dollars are used. 

Federal Reserve Chair Jerome Powell has said that the central bank won’t take action to create a digital dollar unless directed by Congress. Lawmakers are fiercely divided over the issue, making action on a CBDC unlikely this year.

Liang’s speech Wednesday indicated that the department is taking steps to be prepared for such a system if lawmakers and policymakers make the decision to proceed. 

“Even as policy deliberations continue, we are engaging in the technological development of a CBDC so that we would be able to move forward rapidly if a CBDC were determined to be in the national interest,” Liang said during a speech at the Atlantic Council. 

Liang also indicated that the administration is advancing forward with deliberations. She said that in “coming months” leaders from Treasury and the Fed, along with White House offices such as the Council of Economic Advisors, National Economic Council, National Security Council, and Office of Science and Technology Policy, will meet to discuss a possible CBDC. 

The CBDC Working Group, an interagency group created after report released in September,” is developing an initial set of findings and recommendations to support the administration’s discussions. 

The group is weighing the implications of a U.S. CBDC, including considering how it could relate to global financial leadership and help preserve the dollar on a global scale. 

Another key set of objectives the group is considering is over national security, and how the U.S. can create such a system with cybersecurity protections in place that protect user data. 

The recommendations the group will lay out may relate to whether a U.S. CBDC would help advance policy objectives, such as global financial leadership and national security, as well as about the features of the U.S. CBDC would need to do so, Liang said.