Will America’s Central bank create a digital currency?

Qu’est-ce que la monnaie digitale ?

Les monnaies digitales ou « crypto-monnaies » se glissent régulièrement dans l'actualité ces dernières années, Bitcoin en tête. Mais leur utilité et leur utilisation restent, très justement, cryptiques pour les non-initiés. Alors que la Banque Centrale américaine cherche à créer sa propre monnaie digitale, The New York Times propose une explication simple de cette invention.

America’s Federal Reserve says it is in no rush to issue a digital currency, but it is coming under intense and increasing pressure to research and understand the design and potential of digital money. From the Bahamas to China, global central banks are experimenting with digital offerings, fueling concerns on Capitol Hill that the Fed might fall behind the competition.

2. Yet huge questions persist about a central bank digital dollar.“Does the public want, or need, a new digital form of central bank money to complement what is already a highly efficient, reliable and innovative payments arena?” Jerome Powell, the chair of the Fed, asked at an event in March. It’s a tricky question, and the central bank doesn’t seem to have a clear answer yet. Here’s why.

WHAT IS A CENTRAL BANK DIGITAL CURRENCY?

3. A central bank digital retail currency is, basically, electronic cash. Like a cryptocurrency such as Bitcoin, it is data-based and doesn’t exist in the physical world, but the similarities end there. Unlike cryptocurrency, it is backed by a government, meaning it is likely to be more universally recognized as “money” — something you can use broadly to buy goods and services and to pay taxes.

HOW IS THAT DIFFERENT FROM THE MONEY IN MY CHECKING ACCOUNT?

4. You probably already use digital money. Most workers aren’t paid in physical cash, and many people tend to buy their morning latte with a payment card or app rather than by forking over bills and coins. But the currency underlying paychecks and other dayto-day transactions traces back to the commercial banking system.

5. Private digital money carries a tiny sliver of risk compared with cash — banks can fail, and deposits are insured only up to $250,000. People intuitively know this: Consumers

“Does the public want, or need, a new digital form of central bank money?" - Jerome Powell, head of the U.S. central bank.

rush to take out actual dollar bills during times of crisis.

6. A retail central bank digital currency would be equivalent to green paper bills, because it would have direct backing from the Fed. It would be like reserves — electronic central bank money — but available to the general public.

WHO LIKES THIS IDEA, AND WHO DOESN’T?

7. Banks are not keen on the idea of a central bank digital currency. Their lobbyists say the technology would disrupt their business models without offering benefits that the current payment system can’t achieve. 8. But in an era in which cash is going out of style, some central banks see digital cash as a way to make sure the public still has direct access to central bank money. Digital dollars could also have policy applications, perhaps making it easier for the government to put cash straight into consumer accounts during recessions.

HOW FAR ALONG IS THE FED’S RESEARCH?

9. Powell has said researching digital currency is a high priority for the Fed, and lawmakers have kept the pressure on. The Federal Reserve Bank of Boston has begun developing experimental digital currency code along with the Massachusetts Institute of Technology, and the Federal Reserve Board is researching the technology and its financial stability implications.

IS THE U.S. IN A RACE AGAINST CHINA?

10. Emerging markets with big underbanked communities or populations that would benefit from being able to more easily make cross-border payments have been among the earliest adopters of central bank digital currencies. The Bahamas introduced a retail payments digital currency called the Sand Dollar that is available on iOS and Android, and Thailand is among the places that are far along in researching and developing between-bank, cross-border versions.

11. But one player in the central bank digital space has earned more headlines than any other: China. The world’s second-largest economy has been trying out a pilot version of a digital yuan, putting small amounts of it in consumer accounts in cities including Chengdu and Shenzhen and allowing them to spend it. Researchers at PwC said in an early April report that the digital yuan has the potential to replace cash in circulation and that “China is currently believed to be preparing for widespread domestic use” during the Beijing 2022 Winter Olympics.

IS BITCOIN COMING FOR THE DOLLAR?

12. Others worry that private-sector innovations like Bitcoin or “stablecoins,” could become an attractive alternative to government-created cash if central banks don’t keep up.

13. Powell has argued that Bitcoin is more like gold than the dollar. It has value because it’s rare and people want to hold it, so it can even at times be traded for other goods and services, but it is not government-guaranteed money.

14. But global regulators did slow down Facebook’s stablecoin project, originally known as Libra and now called Diem, because they worried about the potential for money laundering and financial system disruption.

15. Powell said in testimony last year that Libra was “a bit of a wake-up call that this is coming fast and could come in a way that is quite widespread and systemically important fairly quickly,” highlighting the “importance of making quick progress.”

1. to be in no rush ne pas être pressé / to issue émettre / increasing croissant, de plus en plus important / design conception / global mondial, international / to fuel susciter / concern inquiétude / Capitol Hill (siège du) Congrès / Fed = Federal Reserve Bank / to fall, fell, fallen behind prendre du retard / competition concurrence.

2. huge ici, grand / efficient efficace / reliable fiable / chair président / tricky délicat, complexe. 3. retail currency monnaie / basically essentiellement / unlike contrairement à / to back soutenir (financièrement), approuver / to be likely to être susceptible de / broadly largement.

4. checking account compte courant / app = application / to fork over dépenser / bill ici, billet (de banque) / coin pièce / to underlie, lay, laine ici, alimenter / paycheck salaire / to trace back to remonter à.

5. tiny sliver infime partie; ici, ...un risque infime... / to fail ici, faire faillite / to insure assurer / consumer consommateur /

actual vrai, véritable.

6. available accessible.

7. to be keen on être enthousiaste (à l'idée de) / to disrupt perturber / current actuel / to achieve ici, offrir.

8. to go out of style passer de mode / policy politique / straight ici, directement.

9. far along avancé / lawmaker législateur / along with avec / board conseil.

10. race course / cross-border transfrontalier, ici international.

11. player ici, acteur (fig.) / to earn gagner; ici, faire / headline gros titre / large grand / amount montant / to allow permettre / widespread large / domestic national.

12. to come, came, come for s'attaquer à / stablecoin monnaie stable / to keep, kept, kept up suivre (le rythme).

13. to argue affirmer / to hold, held, held avoir, posséder / to trade échanger / goods produits, articles.

14. laundering blanchiment.

15. testimony témoignage; ici, déclaration / wake-up call ici, avertissement / fairly assez / to highlight souligner.