The Digital Dollar Project Publishes Comprehensive Review of Digital Modernization of U.S. Dollar

Outlines limitations of existing financial infrastructure and benefits of digital modernization

Identifies digital instruments such as stablecoins, tokenized deposits, and non US-CBDCs as components of digital modernization of the US Dollar

Defines the collaboration needed between the public and private sectors to preserve the Dollar’s prominence amongst digital currency networks of the 21^st Century

WASHINGTON--(BUSINESS WIRE)--The Digital Dollar Project today announced the publication of its latest whitepaper which explores years of research on the need to digitally modernize the U.S. Dollar, preserve US Dollar primacy and integrate new technologies to create efficiencies in the US financial system.

The digital asset revolution of the past several years has thrust the evolving world of modern money into the spotlight. Despite these advancements, the technology through which the Dollar currently operates is quickly demonstrating limitations in an increasingly digital world. Following years of research and collaboration on this changing dynamic, the Digital Dollar white paper presents a review of emerging technologies and their potential to power digital modernization.

“Payment vehicles continue to expand from fungible cash bills and electronic notes to unique, stable digital currencies such as tokenized deposits, stablecoins, and foreign CBDCs,” said Chris Giancarlo, co-founder of The Digital Dollar Project. “Because of this, examination and exploration of US dollar modernization is critical to America’s ability to compete in the global economy of the digitally networked twenty-first Century.”

Cognizant of the January 23, 2025 White House Executive Order prohibiting US federal agencies from undertaking any action to establish, issue or promote central bank digital currencies (CBDCs), the Digital Dollar Project white paper does not champion any particular Digital Dollar infrastructure, but fairly analyzes a range of innovations believing that the global future will include “all of the above”: tokenized deposits, stablecoins, foreign CBDCs and centralized and decentralized digital assets. The whitepaper addresses the business case for digital modernization processes, including reductions in cost and risk and dramatic improvements in transaction speed and collateral efficiency. It provides numerous examples of private sector developments and innovation to demonstrate these benefits. It suggests that the most important outcome is to reinforce the dollar’s status as the world’s reserve currency reflecting the virtues of financial opportunity and economic liberty for which it has historically stood.

The headway made by the private sector demonstrates that competition is the best facilitator of innovation, with one caveat being the risk of impeding network development and interoperability. With this in mind, the paper makes a number of recommendations to support modernization, including:

• Financial institutions and non-bank financial institutions should drive broader (enterprise-level) business cases and foster stronger industry commitment to innovative products and services. Such institutions should also consider the opportunity for financial market utilities (FMUs) to lead the development and implementation of Digital Dollar infrastructure for particular applications and use cases.

• Financial market utilities and consortiums should align on new potential settlement and loss-mutualization models along with broader risk and operational frameworks, while also driving interoperability initiatives and developing common standards.

• Legislators, trade associations, and policy institutes should work together to address regulatory ambiguity and advance legislation that creates appropriate safeguards and equal opportunities for responsible innovation.

Daniel Gorfine, co-founder of The Digital Dollar Project, said, “As tokenized forms of fiat currencies gain broader adoption, it is critical that the U.S. play a leading role in establishing standards and frameworks that ensure the primacy of the Dollar—and all that it represents. This will require active collaboration between a broad cross-section of stakeholders, and our goal for this white paper is to help inform and advance related discussions.”

The Digital Dollar Project white paper was prepared in consultation with its advisory group of economists, business leaders, technologists, innovators, lawyers, academics and consumer advocates and in joint collaboration with Accenture, David Kretz Consulting, and Oliver Wyman.

The Digital Dollar Project encourages you to view the white paper in its entirety at https://digitaldollarproject.org/publications-news/.

About The Digital Dollar Project
The Digital Dollar Project is a neutral, non-profit forum focused on exploring digital innovation in money and future-proofing the U.S. Dollar in a world of decentralized and centralized, sovereign and non-sovereign digital currency networks. The Digital Dollar Project does not call for the ready deployment of a US CBDC—or digital dollar – but does encourage the U.S. to assert principled leadership in CBDC experimentation at home and digital currency standard setting abroad that is consistent with U.S. norms, values, and the rule of law. Visit https://digitaldollarproject.org/.