Payments in the digital realm are increasingly being brainstormed amongst banking and currency experts worldwide. Cashless and contactless payments are the most trending terms debated among payment merchants and regulating bodies alike. The fantasy of cutting the middlemen of the slot and, in turn, experiencing faster, cheaper, and reliable payment transactions is coming close to reality with the advent of the digital dollar.
It all started with cryptocurrencies like Bitcoin and Ethereum gaining reputation for cross border payments outside the traditional banking realm. The anonymity that came with these transactions were a deep concern but at the same time the effectivity of the system was worth a consideration. This led to central banks globally looking into the power of cryptocurrencies and devising their own reliable and secure digital dollar.
Problems before the Digital Dollar launch
To add to the increasing pressure facing by central banks of succumbing to the digital trade, in 2019 social media giant Facebook announced its cryptocurrency project to launch “Libra”, a globalized currency embedded with the reliability of blockchain technology. The project has been bashed by a number of sector experts like Steven Mnuchin, an official at the treasury department, Karan Petrou, partner at Federal Financial Analytics. Chairman of Federal Reserve Jerome Powell. These experts believe that launching such a project amidst tremendous policy concerns makes way for increased cybersecurity threats and crypto crimes.
Jerome Powell recognized the prospective project’s aim to highlight the misalignments of the traditional payment platforms with today’s business needs. He further highlights the urgency to improve payment process, transactional speeds, the security of payment channels, and add to it the digital touch extremely essential in the current world.
CEO of Securrency, Dan Doney, highlighted the importance of Digital Dollar implementation within US markets to curb the $270 billion yearly banking sector expenditure made by the anti-money laundering squad. Automating payment processes with improved traceability is possible with the digital dollar apart from its other benefits of speed, reliability, accessibility, and cost-effectivity.
Covid-19 has added to the building pressure, with the world moving towards digitization like never before. The digital dollar is no more consideration for the future but the need of the present hour.