US treasury secretary floats idea of digital dollar maintained by the Fed

Published at: Feb. 22, 2021

Janet Yellen may be open to having United States regulators consider a digital currency, but she still seems to have strong concerns about Bitcoin (BTC). 

In an interview for The New York Times' DealBook DC Policy Project held on Monday, Yellen said it makes sense for the Federal Reserve to look into a digital dollar. Speaking to Andrew Ross Sorkin, the treasury secretary said a digital dollar maintained by the Fed could result in "faster, safer and cheaper payments," but added there were "a lot of things to consider" before a possible rollout. She questioned how regulators would "manage money laundering and illicit finance issues" as well as the impact on banks and the Fed.

In addition, the treasury secretary criticized Bitcoin as a medium of exchange, not mentioning its use as a store of value:

"I don’t think that Bitcoin is widely used as a transaction mechanism. [...] It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering."

Yellen spoke about cryptocurrencies and BTC prior to being sworn into office on Jan. 26. In her confirmation hearing to be treasury secretary, she called crypto a "growing concern" in the United States that is "mainly for illicit financing." Her subsequent written statements reiterated these views connecting digital assets and illegal financing but also included that she planned to encourage the use of digital assets in the U.S. government for "legitimate activities."

She is the first woman to be treasury secretary and previously served as the chair of the Federal Reserve under former U.S. President Barack Obama before leaving in early 2018. Yellen once called Bitcoin "anything but useful," but she was largely silent on crypto and blockchain until being tapped by President Joe Biden.

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