Biden isn’t getting rid of cash with Executive Order 14067

Cryptocurrencies like Bitcoin have surged in popularity in recent years, prompting President Joe Biden to sign an executive order in March 2022 outlining the government’s plan to address the “risks and harnessing the potential benefits of digital assets.”

The executive order also explores the possibility of creating a centralized bank digital currency (CBDC) in the United States persons took to social media to claim in August that the executive order would phase out cash and render paper money “worthless.”

VERIFY reader Jerry also emailed the team asking, “Is President Biden Abolishing Paper Money For Digital Currencies?”

Will Biden’s Executive Order Replace Paper Money With Digital Currency?

No, Biden’s executive order will not replace paper money with digital currency.

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Under Executive Order 14067, the Federal Reserve is tasked with examining how a central bank digital currency (CBDC) could be created and evaluating the necessary steps and requirements for its implementation.

The executive order also empowers the U.S. Department of Justice to determine whether the Federal Reserve has the authority to issue a CBDC, according to Aaron Klein, an expert on financial technology and regulation at the Brookings Institution.

The Atlantic Council, a non-partisan US think tank, defines a CBDC as digital money “backed and issued by a central bank.” In the United States, that central bank would be the Federal Reserve.

The only form of central bank money Americans have access to today is cash, the Federal Reserve notes on its website. Aaron Klein, a financial technology and regulation expert at the Brookings Institution, explained that the digital money Americans currently use every day with their credit and debit cards comes from commercial banks.

Cryptocurrencies like Bitcoin are also considered digital currencies but are not issued by a central bank like a CBDC.

If the Fed creates a CBDC, it would be different from existing digital money as it would be issued and backed by the Federal Reserve instead of a commercial bank.

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The federal government has not yet made any decisions about issuing US CBDC as a result of the executive order, but creating one would not mean the government getting rid of cash.

“There is nothing in the executive order that ends or eliminates cash. Period,” Klein told VERIFY.

The Federal Reserve also says on its website that it is “considering a CBDC as a means to expand secure payment capabilities, not to reduce or replace them.”

Around 100 countries other than the US are already exploring CBDCs through research and testing, including some that have already started distributing the virtual money, such as Jamaica and Nigeria, according to the Atlantic Council. But it’s unclear how exactly a US CBDC would work if designed and developed by the Federal Reserve.

“We don’t know the answer,” Klein said. “One of the questions that’s been there is, does that mean people get direct accounts with the Federal Reserve like you have an account with your bank to use a debit card?”

In January 2022, the Federal Reserve released a discussion paper examining the pros and cons of a potential CBDC.

In a press release, the Fed said a CBDC could offer faster payment options between countries and secure digital payment options for households and businesses. However, there could also be downsides, including the fact that a CBDC would “preserve monetary and financial stability and complement existing means of payment.”

Some consumers might also have privacy concerns if the Fed develops a CBDC, which Klein says is a legitimate concern given that “digital transactions can be less anonymous than cash.” But Klein pointed out that the same potential privacy issues already exist when Americans use their debit or credit cards every day.

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