President Donald Trump has signed an executive order banning the development and implementation of a central bank digital currency (CBDC) in the United States.
The decision limits the Federal Reserve's ability to issue a digital version of the dollar that can be used as legal tender.
President Donald Trump signed an executive order on Thursday that effectively bans the creation of a US Central Bank digital currency (CBDC). This decision has long been supported by many Republicans in Congress.
In his decree, Trump said this decision would protect Americans from the risks of the Central Bank's digital currencies, which "threaten the stability of the financial system, individual privacy, and U.S. sovereignty."
The decree includes a ban on "the creation, release, distribution, and use of CBDC under U.S. jurisdiction," he added.
CBDC, also known as "digital dollars," could theoretically be issued by the Federal Reserve and be interchangeable with physical dollars, which would give the U.S. central bank control over the supply of virtual currency.
Former President Joe Biden previously instructed the Federal Reserve to explore the possibility of creating a CBDC. Proponents of this idea argue that such a currency could facilitate the integration of people without bank accounts into the US financial system, as well as be used to track and combat criminal activity.
However, opponents of CBDC, including many Republicans in Congress, believe such currencies could threaten people's privacy and potentially undermine the banking system by reducing incentives to use private banking services.
The Federal Reserve is conducting research on CBDC, but has repeatedly stated that it does not plan to issue such a currency.
"People shouldn't be worried about the central bank's digital currency," Federal Reserve Chairman Jerome Powell told a Senate Banking Committee meeting last year. - Nothing like that is going to happen anytime soon."