Giancarlo, whose comments came during Yahoo Finance’s On the Move show on February 21, said that the Fed must develop a digital currency in order to compete with the central bank digital currency, or CBDC, being developed by China.
Giancarlo noted that e-commerce or online shopping would benefit greatly from the US Fed developing a digital payment solution as consumers won’t have to pay extra fees to third-parties such as debit and credit card providers.
“When we talk about a digital dollar we’re talking about in the virtual world, to have that same immediacy of payment that we have in the analog human world.”
Giancarlo pointed out that the digital version of the US dollar would not be affected or impact other projects in the crypto-asset sector. He also noted that Bitcoin (BTC), the flagship cryptocurrency, and new initiatives such as the Facebook-led Libra bring their own unique “value propositions” and may exist alongside a CBDC.
“I think the market is always better when there is a lot of competition out there… An instrument like Bitcoin may serve to the equivalent to the digital dollar might be equivalent to the digital gold.”
Giancarlo recommends updating the US regulatory guidelines in order to keep up with the changes that cryptocurrencies and DLT bring to the financial ecosystem.
“It’s going to change things dramatically and our laws need to evolve with that as they’ve done over the 90 years, now they need to evolve again.”
Giancarlo is notably involved with a Digital Dollar initiative that is backed by leading consulting firm Accenture, which is reportedly working with Sweden’s reserve bank on its own virtual currency, the e-krona.
The Digital Dollar project was started by Giancarlo with the stated aim of creating a non-profit entity to look into the potential use cases for converting the fiat version of the dollar into a “fully electronic currency based on blockchain.”