Monday Morning Brief for May 2, 2022: Digital dollars inevitable, but ...
- Published: May 2, 2022, 7 AM
Digital U.S. currency is inevitable, but it does not necessarily mean that traditional forms of currency will disappear during the lifetimes of those reading this week’s issue.
As Paul Gilkes reports this week, a member of Congress has introduced legislation that if it becomes law, would require the Treasury Department “to develop and pilot digital dollar technologies that replicate the privacy-respecting features of physical cash.”
Nations and central banks throughout the world are exploring the possibilities of issuing their respective currencies in digital forms. If this happens — when this happens — it will simply be a natural progression that began centuries ago when the first forms of “money” (physical coins and notes) were gradually replaced by alternative methods of payment.
Today, “money” no longer has to have a physical form. Many of us can go days or weeks or months of paying for goods and services without tendering traditional forms of money such as coins or paper money. Alternative methods of payments — credit cards and phone apps linked to one’s bank accounts — are widely used today.
Despite the widespread use of nontraditional payment methods, most governments still issue physical forms of money, and millions still use traditional currencies when making payments. In the United States, millions of Americans still prefer old-fashioned cash to credit cards and iPhone apps. Expect the government and the Federal Reserve to continue catering to the traditionalists for years to come.
However, a complete abandonment of traditional moneys is possible over the short term. In Sweden, for example, outstanding cash (coins and paper money) amount to about 1% of Swedish GDP. It is legal in Sweden for businesses to refuse to accept coins and paper money as payments, and the Swedish public seems to have willingly abandoned traditional money.
Such a transition will not occur quickly in the United States. Public usage patterns will continue to drive cash policies in this country. Even if the new legislation becomes law, or if a digital Federal Reserve note is introduced, these “digital dollars” are unlikely to completely replace coins and notes. The government’s money-making agencies, the United States Mint and Bureau of Engraving and Printing are in no danger of being shut down.
Connect with Coin World:
Sign up for our free eNewsletter
Access our Dealer Directory
Like us on Facebook
Follow us on Twitter
MORE RELATED ARTICLES
US Coins Feb 27, 2024, 5 PM
US Coins Feb 27, 2024, 3 PM
US Coins Feb 26, 2024, 9 PM
US Coins Feb 26, 2024, 3 PM