No, Biden executive order won’t replace paper money with digital currency (2024)

FAQs

No, Biden executive order won’t replace paper money with digital currency? ›

“There is nothing in the executive order that ends or eliminates cash. Period,” Klein told VERIFY. The Federal Reserve also says on its website that it is “considering a CBDC as a means to expand safe payment options, not to reduce or replace them.”

Central bank digital currencies by phase

So far, the US is still in an exploratory phase with the Biden administration announcing an executive order in 2022 that led to further research into digital currencies.

As people move toward more electronic or digital forms of payment, it might seem like paper money is on its way toward obsolescence. But experts say that cash will always be around.

Here in the U.S., if the Fed issued a digital dollar, that digital dollar would be substantially identical to the cash dollar and could be exchanged as such. The exchange rate would be constant, as they would be the same thing created by the same governmental mechanism.

Central bank digital currencies (CBDCs) are coming, but a digital dollar is unlikely in the near term, Bank of America (BAC) said in a report on Monday.

Will a U.S. CBDC replace cash or paper currency? The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them.

The US is moving toward cashless payments, with a substantial increase in the use of mobile wallet apps and contactless cards. A report from the Federal Reserve Bank of San Francisco found that payments made using cash accounted for just 18% of all US payments in 2022.

All that being said, cash may certainly continue to fall in usage, but there's good reason to think it won't go away entirely. For one, an article by the Federal Reserve Bank of Boston pointed out that "conditions were ripe" for a "fatal cash crash" during the pandemic, but that did not occur.

What to Own When the Dollar Collapses. Historically, tangible assets like gold and real estate have been sought after as they tend to retain intrinsic value. Investing in commodities such as precious metals, oil, and agricultural products is also considered a smart choice.

The collapse of the dollar remains highly unlikely. Of the preconditions necessary to force a collapse, only the prospect of higher inflation appears reasonable. Foreign exporters such as China and Japan do not want a dollar collapse because the U.S. is too important a customer.

Are credit unions going to digital currency? ›

In 2021, federal regulators gave CUs the green light to partner with cryptocurrency providers, paving the way for their entry into this dynamic market.

Is FedNow mandatory for my financial institution? No–financial institutions in the U.S. are not required to use the FedNow Service offered by the Federal Reserve. Financial institutions looking to give their consumers real-time payment services have the option to choose the FedNow Service.

Key Takeaways. A central bank digital currency (CBDC) is the digital form of a country's fiat currency. A nation's monetary authority, or central bank, issues a CBDC, which promotes financial inclusion and simplifies the implementation of monetary and fiscal policies.

But that begs a critical question: What would replace the dollar? Some say it will be the euro; others, perhaps the Japanese yen or China's renminbi. And some call for a new world reserve currency, possibly based on the IMF's Special Drawing Right or SDR, a reserve asset.

19 of the Group of 20 (G20) countries are now in the advanced stages of CBDC development. Of those, eleven countries are already in the pilot stage. This includes Brazil, Japan, India, Australia, South Korea, South Africa, Russia, and Turkey. 3 countries have fully launched a CBDC—the Bahamas, Jamaica and Nigeria.