The U.S. Secretary of the Treasury has delivered the framework for President Joe Biden in response to his executive order on Ensuring Responsible Development of Digital Assets.
The Independent Community Bankers of America recently suggested the risks of central bank digital currencies (CBDC) “far outweigh the uncertain and unproven benefits cited by CBDC advocates”.
The U.S. Treasury also warns of the risks associated with digital assets stating that “uneven regulation” raises risks to financial stability and the protection of consumers, investors, businesses.
Uneven supervision and compliance across jurisdictions also create opportunities for arbitrage and risks, challenges which the Treasury suggests impede the ability to investigate illicit digital asset transaction flows that frequently jump overseas.
International cooperation is “critical” to maintaining high regulatory standards and a level playing field to expand access to safe and affordable financial services, according to the Treasury.
The Treasury stated that the U.S. “must continue to work with international partners on standards for the development of digital payment architectures and CBDCs to reduce payment inefficiencies and ensure that any new payment systems are consistent with U.S. values and legal requirements”.
Meanwhile, the Treasury will continue to work with organizations including G7, G20 and the International Monetary Fund.
Collaborating with G20 is set to help increase engagement with other major economies to reduce the challenges of cross-border payments and identify financial stability risks of digital assets.