Former CFTC chair J Christopher Giancarlo and associates launched the Digital Dollar Foundation to advance a United States Central Bank Digital Currency (CBDC).

J Christopher Giancarlo, former Chair of the Commodity Futures Trading Commission (CFTC), along with Charles Giancarlo and Daniel Gorfine, have joined hands with Accenture on the digital dollar, or US CBDC project.

The nonprofit Digital Dollar Foundation engaged Accenture as the lead architect and technology innovation partner for the project. Accenture is working with Sweden’s Riksbank to develop an e-krona CBDC as a pilot project.

Advantages of a dollar CBDC

There has been little change in the management of currencies and paper money since the 19^th century.

“The digital 21st century is underserved by an analog reserve currency,” said Chris Giancarlo in a statement. “A digital dollar would help future-proof the greenback and allow individuals and global enterprises to make payments in dollars irrespective of space and time. We are launching the Digital Dollar Project to catalyze a digital, tokenized U.S. currency that would coexist with other Federal Reserve liabilities.

“It would serve as a settlement medium to meet the demands of the new digital world. It would also be a cheaper, faster and more inclusive global financial system.”

David Treat, Accenture said: “Central Bank Digital Currency (CBDC) is a key enabler for the modernization of financial systems. It will drive material economic and social improvements and form the basis for a wave of new innovation.”

Dollar CBDC: WSJ op-ed

In October, Chris Giancarlo and Daniel Gorfine said in a WSJ op-ed that recent developments in digital currencies threatened the dollar’s pre-eminent status as a global reserve currency. Developments such as cryptocurrencies and the Libra stablecoin from Facebook were possible challengers to the US dollar. Further, China is also racing to develop its own digital currency. “A challenger to the US dollar could end the delicate world economic order Americans have long taken for granted,” the authors wrote.

At the time, Giancarlo and Gorfine proposed “a government-sanctioned blockchain protocol, created and maintained by an independent nongovernmental group.”

However, banks and other trusted payment organizations would administer the system.

A blockchain-based digital dollar CBDC would allow for faster transactions, greater transparency and lower costs.

In December, Mu Changchun, head of the People’s Bank of China’s digital currency research institute, said China is developing “a digital form of the yuan.” Mu also said that the central bank had completed top-level design, formulation, functional research, and testing of the digital yuan. But the bank will run pilot projects to test the digital currency.

How it works

“Cash brought into the system would be exchanged for digital U.S. dollars on a blockchain,  Giancarlo and Gorfine had suggested in October. “The cash would reside in special escrow accounts maintained by the Federal Reserve.”

The current thinking also is that a dollar CBDC would be similar to paper currency and backed by the Fed. The digital currency should be portable, in a digital format, and as simple as sending a text. It would serve as an effective digital settlement medium nationally and internationally.

“It will help to preserve, as well as of full integration with, the existing financial system,” said the statement.

Steps forward

In an email to CoinDesk, Gorfine said that several issues must be resolved before the issue of a dollar CBDC, including legal, economic, privacy, security, and technology concerns.

However, the Digital Dollar Foundation would resolve these with a broad range of stakeholders through a phased approach. It may also include actual or proposed pilots.

Ultimately, the Fed would issue a digital dollar. “Our goal is to advance a framework for potential, practical steps that could support such an effort.”

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