A former CFTC Chairman and a former CFTC chief innovation officer argued that America should “send the dollar to cyberspace“ in an opinion piece published yesterday by the Wall Street Journal.
The piece was authored by J. Christopher Giancarlo and Daniel Gorfine, both former employees of the Chairman of the Commodity Futures Trading Commission—one of the toughest financial regulators in the US.
Giancarlo and Gorfine propose a “digital dollar—a government-sanctioned blockchain protocol, created and maintained by an independent nongovernmental group but administered by banks and other trusted payment organizations.”
Per the system, “Cash brought into the system would be exchanged for digital US dollars on a blockchain, with the cash lodged in special escrow accounts maintained by the Federal Reserve.”
The authors believe the new system would maintain the authority of “trusted, regulated intermediaries to maintain digital wallets and validate transactions”, whilst allowing for its uses to make the most of blockchain’s advantages, like higher transaction speeds, security, and low costs.
The system would also secure and extend the “central role of the US dollar in global finance” against new technological advances. Giancarlo and Gorfine expressed concern over digital currency initiatives by social networks, which they believe could “eventually erode the dollar’s status as the most popular currency for international exchange”—a concern shared by US Senators and Representatives regarding Facebook’s proposed Libra cryptocurrency. They also highlighted concerns over new digital currencies issued by central banks, like the Chinese government’s upcoming digital version of the Yuan.
The authors propose a pilot program that would allow people to use smartphone apps to buy digital dollars, then use them for everyday purchases.
If America can put a man on the moon, they argued, then perhaps they can make the digital dollar. While they wait, China’s plans to put more men on the moon—and create a digital Yuan—continue apace.