Since digital currencies have been in existence, there has been talk about them potentially replacing fiat currency in the future and this is because digital currencies have an ease-of-use and privacy that simply does not exist with fiat currency as this has led many people seeking them out in lieu of fiat currency. One of the biggest pieces of evidence of its progress is the fact that several nations have created their own national currency such as Venezuela and reportedly China who are doing this in response to the Libra token.
In a September 30, 2019 letter, two US lawmakers named French Hill and Bill Foster sent a formal letter to Federal Reserve Board Chairman Jerome Powell, asking if there are any plans for the federal reserve to develop a digital US dollar token and also stated that the current fiat currency system is in danger due to the widespread adoption of cryptocurrency.
One of the points raised in the letter is the fact that the need for digital currency is being recognized by many countries around the world and that it would be in the best interest of the United States to look into this as well.
“Internationally, the Bank for International Settlements conducted a study that found that over 40 countries around the world have currently developed or are looking into developing a digital currency,” the letter said.
Digital currency, they state, has the potential to take on utilities off fiat currency while still providing several benefits such as seamless use and easy sending of funds as well as privacy for users. It also states that the Federal Reserve has a responsibility to begin the development of a digital national currency and that it has the power to create a safer and more efficient financial system for the masses by embracing cryptocurrency.
Not everyone shares the sentiment, however, as former Federal Reserve official Simon Potter previously stated that all ideas of a digital currency gaining dominance of the US dollar is unrealistic and also went on to state that while private companies can work around digital currencies, a central bank simply cannot.
“I see no argument that makes sense to have something that complicated out there when you have large, liquid capital markets in the U.S. Not having one currency that you can basically price things and have a deep market in, that makes life much harder for the global economy,” he said.