Christopher Giancarlo, the former chairman of the U.S. Commodity Futures Exchange Commission (CFTC), has revealed more details about his recently launched Digital Dollar Project.
In prepared remarks for The Block’s event hosted by E8 Partners in Davos on Wednesday, Giancarlo said he launched the project because the circulation of U.S. central bank money has remained “strictly local” and its functionalities are “limited.”
“We seek to encourage the next major innovation in the U.S. currency: a tokenized fiat currency issued by the Federal Reserve System,” said Giancarlo. “A new digital form of the Dollar that, alongside traditional fiat coins, bank notes and reserves, would enjoy the full faith and credit of the U.S. government as central bank money.”
Giancarlo has 35 years of work experience in U.S. financial markets, out of which, he spent five years at the CFTC during 2014-2019. Giancarlo has since returned to the private sector and now wants to change the “slow, expensive, and uncertain” money transfer system.
“The process of sending money has been slow to change,” he said at the event, adding that “more than two-thirds of central banks” have been investigating new payment systems, including tokenization.
Giancarlo also talked about yesterday’s announcement by the Bank of England, where the central bank said it has formed a group with five other central banks - the Bank of Canada, the Bank of Japan, the European Central Bank, the Sveriges Riksbank (Sweden) and the Swiss National Bank - to explore uses cases of central bank digital currencies (CBDCs).
Additionally, Giancarlo mentioned efforts from the private sector, including Facebook-supported Libra stablecoin project, and digital coins from Goldman Sachs, JPMorgan and Walmart, among others.
“These private sector developments are important. They help advance innovation. They are also causing us to take a new and more clear eyed view of money – especially the efficacy of traditional analogue fiat money in the new digital economy,” he said.
Giancarlo launched the non-profit Digital Dollar Project last week, in an association with IT giant Accenture. The project's other partners include Daniel Gorfine (a former CFTC official), Giancarlo’s brother Charles Giancarlo, a former Cisco Systems executive and a former executive at the private-equity firm, Silver Lake Partners.
At the time, in an exclusive interview with The Block, Giancarlo said the project aims to do the “intellectual heavy lifting” of discovering and resolving the key issues that surround the launch of a digital dollar.
Via commercial banks
Giving further details at today's event, Giancarlo notably said that a digital dollar would be distributed to end-users through commercial banks and “trusted” payment processors. The proposed design appears to be similar to China’s digital currency, which will be first distributed to commercial banks and then users and businesses can register digital wallets with these commercial banks.
Giancarlo’s digital dollar project aims to support retail, wholesale, as well as international payments, with “needed scalability, security, and privacy.”
Some challenges, such as money laundering, remain, admitted Giancarlo. He said these can be mitigated “by channeling a digital dollar through the U.S. banking system,” while offshore use of a digital dollar may require "additional safeguards."
“The adoption of a digital dollar in the U.S. is seen as critical to a possible orderly recalibration of the dollar’s attractiveness relative to other digital currencies to support stable international monetary conditions,” he concluded.
Editor's Note: This piece has been updated to clarify that Silver Lake Partners is not involved in the Digital Dollar Project
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