U.S. President Donald Trump’s executive order banning the creation of a “digital dollar” has opened the door for China and Europe to take the lead in setting global standards for central bank digital currencies (CBDCs).
The ban prohibits U.S. agencies from pursuing, promoting, or issuing a CBDC and signals a significant policy shift in the United States.
Until last week, the United States was among over 130 countries exploring CBDC initiatives, representing 98% of the global economy. Supporters of CBDCs emphasize their potential to enable 24/7 real-time cross-currency payments, while opponents cite concerns over privacy and government overreach.
China, the Bahamas, and Nigeria are emerging as leaders in CBDC adoption, with growing usage of their e-currencies. The European Central Bank is also preparing to outline key features of a potential digital euro later this year.
Trump’s move contrasts with these developments, as the Federal Reserve had already shown limited interest in pursuing a retail digital dollar.
Josh Lipsky of the Atlantic Council’s CBDC tracker stated that the executive order sends a message to the global community, leaving Europe to set privacy and cybersecurity standards through its digital euro initiative. He added that the absence of U.S. involvement could allow China to position itself as a leader in CBDC technology.
The executive order comes amid growing geopolitical divides over CBDCs. The Bank for International Settlements (BIS) recently exited the “mBridge” project with China, Hong Kong, and other economies, citing concerns over privacy and sovereignty. The U.S. decision further complicates global coordination on CBDCs.
The absence of U.S. leadership in CBDCs raises questions about future interoperability and the role of stablecoins in global financial systems. For Agora to proceed without Federal Reserve involvement, significant adjustments to incorporate stablecoins would be necessary.
