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Illustration: Aïda Amer/Axios

The U.S. is starting to get serious about a central-bank-backed digital currency, with recent comments from top officials laying out the strongest support yet.

Driving the news: On Tuesday Fed chair Jerome Powell told Congress that developing a digital dollar is a "high priority project for us," but added that there are "significant technical and policy questions."

Why it matters: More consumers and financial institutions are transitioning toward digital payments, putting greater pressure on policymakers to ensure the dollar's status as the world's reserve currency remains intact.

The big picture: Powell's "high priority" language and the ensuing report reflect a shift in rhetoric and action from the Fed, which had previously urged caution and patience on the development of a digital dollar.

  • Treasury Secretary and former Fed chair Janet Yellen had similar comments earlier this week, saying, “It makes sense for central banks to be looking at” the issue.
  • “Too many Americans don’t have access to easy payments systems and banking accounts, and I think this is something that a digital dollar, a central bank digital currency, could help with. It could result in faster, safer and cheaper payments, which I think are important goals.”

What's happening: Cash accounted for just 20.5% of all in-store payments globally, down by nearly a third from 2019, according to a report from financial services company FIS. By 2024 FIS expects that to drop to 13%.

  • "The pandemic accelerated the decline of cash by over three years, exceeding in 2020 our previous projection for 2023," FIS analysts note in the report.

Between the lines: Perhaps more important than the decline in cash usage is the growing popularity of cryptocurrencies and the acceleration of real-world testing by China's central bank of its own digital currency.

  • Data analysis company MicroStrategy announced Wednesday it had purchased another $1 billion of bitcoin, while payment processor Square announced it had added another $170 million of the cryptocurrency.
  • China on Tuesday said that the People's Bank of China was extending testing of its digital renminbi to the city of Chengdu, which is home to 16 million people.
  • And the PBOC announced it would be participating in a cross-border payment project with the central banks of Thailand, United Arab Emirates and Hong Kong that would explore distributed ledger technology.

Go deeper

Dion Rabouin, author of Markets
Feb 24, 2021 - Economy & Business

U.S. economic growth expectations go higher still

Federal Reserve Chair Jerome Powell. Photo: Caroline Brehman/CQ-Roll Call, Inc via Getty Images)

Fed chair Jerome Powell was the latest to cosign higher U.S. growth expectations on Tuesday, agreeing that he could see the U.S. economy growing in the range of 6% in 2021 and reaching its pre-pandemic level by the first half of this year.

Why it matters: Powell joins an expanding chorus of economists and investors who see the U.S. growing much faster than expected this year, reaching annual GDP growth not seen since the 1980s and about three times the average growth rate of the past 15 years.

Updated 53 mins ago - Axios Twin Cities

Police: Officer who shot Daunte Wright accidentally pulled gun instead of taser

The officer who fatally shot Daunte Wright, a 20-year-old Black man, outside Minneapolis Sunday appeared to have inadvertently pulled out her gun instead of a taser, police said.

Driving the news: "This appears to me, from what I viewed in the officer's reaction and distress immediately after, that this was an accidental discharge that resulted in the tragic death of Mr. Wright," Brooklyn Center Police Chief Tim Gannon told reporters Monday.

2 hours ago - World

Scoop: U.S. and Israel to hold strategic Iran talks on Tuesday

Jake Sullivan. Photo: Jim Lo Scalzo/EPA/Bloomberg via Getty

Top national security officials from the U.S. and Israel will convene virtually on Tuesday for a second round of strategic talks on Iran, three Israeli officials tell me.

Why it matters: The talks come two days after an explosion at an Iranian nuclear facility that experts consider a likely act of Israeli sabotage, and one day before the U.S. resumes indirect nuclear talks in Vienna over a return to the 2015 nuclear deal — a prospect that has raised anxiety levels in Jerusalem.