"We need to get it right rather than be in a race with China." That's what New York Federal Reserve President John Williams just said in a response to a question about whether and when the U.S. will create and sanction an official digital dollar. His remarks came in a just-concluded session with the Council on Foreign Relations.
China and a handful of other counties - many of which are small Caribbean nations - have been moving forward with their own versions of central bank digital currencies. Types of digital currencies include cryptocurrency, virtual currency and, yes, central bank currencies that nations such as China, Nigeria, St. Lucia, and St. Kitts have created.
Williams is correct. It's the Wild West out there when it comes to digital currencies. We as a nation need to place a premium on speed, efficiency, and transaction-cost reduction of course, but also on security. There is simply no question these currencies can be corrupted - and are already being criminalized - in their use for money laundering, for example, so we are well served to build a framework correctly and for the long haul. The fact that China and Nigeria have moved forward with national digital-currency initiatives only makes me more certain that Williams is right. The premium is on being smart and best in this domain, not necessarily first.
Image courtesy of Ledger Insights.