- Several segments of the US Federal Reserve and the Treasury are lobbying to bring about the digital dollar
- With huge implications for the society and the economy, thorough research is being carried out in the cryptocurrency realm
- Ed Wilson, a partner at Venable LLP, carefully analyzes the merits of introducing a CBDC at large.
Treasury secretary Janet Yellen agreed on the hypothesis that digital currency tokens would enable quicker payments in a hassle-free manner. In a virtual conference. However, it is not without certain caveats, some of which include curbing money laundering and illicit finances. Ed Wilson who is now a senior partner at Venable LLP provides his valuable expertise to the cabinet offices. He did this to help out in consultations. Ed is no stranger to volatile economic situations, having been the general counsel to the Bush administration himself.
Evolving technologies in the current setting
One of the main problems which plague economic systems worldwide is the non-inclusion of certain sections of the society. A Central Bank Digital Currency (CBDC) could potentially solve this issue by streamlining the process while also making it ubiquitous. Moreover, it would also enable citizens to receive direct benefit transfers in a speedy fashion. As tokens combine the properties exclusive to cash along with blockchain’s top-notch security of a permanent database and verifiable trail of accounts, bolstering of anti-money laundering (AML) task forces become much more practical.
Ed added that the current rules-based system is quite inept at gauging the legitimacy of parties involved in a transaction. Rule-based system often consumes a lot of time and thus becomes seemingly inefficient in the process. Artificial intelligence and Machine learning may radically change that perspective in matters related to combating fraud. As a more relatable example, he cited the Recent disbursement of stimulus checks is a prime paradigm where cryptocurrencies can be incorporated to achieve better and faster results.
However, Ed also cautioned that the role of the Fed, the Treasury and commercial banks could become increasingly diminishing post CBDC mass adoption. To ensure that banks are cushioned against any negative effects, he suggested banks change their working model to reduce dependencies on fee incomes and the issuance of credit cards to a more robust account-to-account system with carefully planned manoeuvres along the way.
With effective technology in place, human capital can be freed up from the FinTech sectors while proper regulations will win the war against money laundering and unlawful transactions.