The Federal Reserve claimed that there are many challenges against the US dollar including the private & official Digital Currencies.
Blockchain and crypto adoption is Increasing rapidly. The adoption of blockchain is creating a big challenge among the global financial authorities. A recent example of China can be seen, which released their Digital Yuan (CBDCs) to fight perfectly against the existing high profile currencies.
On 6 October, the Federal Reserve published a paper on the potential risks because of the challenges posed by the Digital Currencies and similar things.
The Fed claimed that the United States dollar may face big problems to get down against such challenges in future.
“The International Role of the U.S. Dollar,” leaders of the Fed’s international finance department did not predict any dislodging of the U.S. dollar from its privileged position in the “foreseeable future.”
According to the Fed, The main challenges against the US dollar in the long run are The European Union, an ascendant China and digital currency.
For digital currencies, the Report paper says that the Increase of the adoption of private sectors and official currencies are the main part of the concern against the US dollar. And these can reduce the trust of the people from the Dollar.
Reports also say that the Federal Reserve is facing huge political pressure to work over crypto related operations, in particular US digit dollar.
While few days back, the US treasury department said that they are not in the rush or any kind of competition to bring Central Bank Digital Currency (CBDCs) but they will do research and Investigation to figure out the benefits and potential risks.