Former US Treasury advisor predicts no ‘real action’ from Fed on CBDC (ft. Michael B. Greenwald)

Word on the Block | Forkast.News

Bitcoin took another major leap recently toward becoming mainstream after its adoption by El Salvador as legal tender. Meanwhile, central bank digital currencies (CBDC) are gaining momentum in economies around the globe.

Michael B. Greenwald, the first US Treasury attaché to Qatar and Kuwait, and now the director of Tiedemann Advisors, sees El Salvador’s venture as Bitcoin’s great inflection point as the world keeps a close eye on Bitcoin’s first national testbed.

“Countries like El Salvador, they're not going to have huge impacts on what the U.S. does or others do, but it definitely does bring the issue to the table and it raises alarm bells,” Greenwald told Forkast.News in a video interview. “Ultimately, it's going to be the large central banks and what it means for them as they create a new digital asset framework.”

In Asia, China’s e-CNY experiments are expanding to more cities and sectors. The digital yuan may be China’s effort to counteract what Greenwald calls the “weaponization of the dollar”.

“But let's remember there's a divide of the Fed right now,” Greenwald said. “You've got Randy Quarles and Lael Brainard, where one is pushing a stablecoin approach and one is pushing a central bank digital currency.”

Such divisions will likely spur debates for years to come and may ultimately lead to U.S. policy paralysis, Greenwald predicts, “without any real action.”

In the meantime, the digital yuan is already being used widely in what is already essentially a soft rollout across China, from public transport to the country’s futures market, which Greenwald sees as an alarming challenge to the dollar’s future international dominance.

Could there also be a scenario where these rival currencies will one day coexist in the same digital wallet? According to Greenwald, a future digital dollar and the digital yuan will unlikely cozy up to each other, especially not in the near future.

“But I do see a digital dollar in the same wallet as a digital yen or a digital euro or a digital pound,” Greenwald said. “The cross-border issue in a future digital wallet, that’s definitely one of the issues the Fed is looking to tackle in the coming months to years.”

Watch Michael Greenwald’s full interview with Forkast.News Editor-in-Chief Angie Lau to learn more about the internal divisions within the U.S. over a CBDC, the future of Bitcoin as a currency outside El Salvador, how the central banks of the art world are leading the NFT revolution and more.