Congressional researchers: Lawmakers may want to consider how digital currency legislation could impact USD’s reserve status

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Congress’s in-house research service says there’s no evidence the dollar is losing its place as the dominant reserve currency — but it may benefit lawmakers to look into how digital currency legislation could impact that status.

In its “The U.S. Dollar as the World’s Dominant Reserve Currency,” report, the Congressional Research Service said a closer look at the effects of the growing crypto space hasn’t yielded any significant cause for concern related to the dollar’s position.

However, it acknowledged that while “cryptocurrencies remain a small, volatile, and niche market,” central bank digital currencies (CBDCs) are on the rise, with 80% of central banks working on an offering, according to a Bank for International Settlements (BIS) survey.

It recommended Congress continue analyzing the dollar’s status, especially in relation to economic and technological shifts. “To date, there is no evidence of a shift away from the U.S. dollar as the dominant reserve currency. However, Congress may wish to…consider how legislation in a range of policy areas, including sanctions and digital currency, might impact the dollar’s dominant reserve currency status,” the report states.

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Legislation containing language for the creation of a digital dollar has been introduced before, but none have moved forward.

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