As central banks around the world accelerate the development of digital currencies, the United States faces a critical decision: whether to issue a “digital dollar,” and if so, how to ensure that it upholds the principles that have long defined the US financial system. While the technical aspects of digital currency design are essential, they must not overshadow the foundational issue: any American digital currency must reflect and preserve the country’s core values — privacy, open access, rule of law, and individual liberty.
This is not just a matter of domestic policy. In an increasingly multipolar financial world, the global standing of the US dollar depends as much on trust in its governance as on the strength of the US economy. The way America approaches digital currency could reinforce—or erode—that trust.
A Changing Global Landscape
Other countries are already moving forward. China’s digital yuan is the most developed central bank digital currency (CBDC) in circulation, designed with full state visibility into every transaction. The European Central Bank is also exploring a digital euro, with proposed design elements that include identity-linked wallets and spending limits. These systems offer efficiency and control—but they also raise concerns about surveillance, state overreach, and financial exclusion.
The US must chart a different course. The dollar is not merely a unit of account or a means of payment. It is a symbol of economic freedom, legal certainty, and institutional reliability. These are not abstract ideals—they are the conditions that have made the US dollar the world’s reserve currency. If America is to introduce a digital dollar, it must embody those same ideals in its design.
The Dollar’s Legacy of Trust
The dollar’s international dominance has never depended solely on military power or economic size. It has relied on the predictability of US law, the openness of its markets, and the absence of arbitrary intervention in financial transactions. Capital flows to the dollar because it is underwritten by institutional restraint and democratic accountability.
Any digital version of the currency must sustain this legacy. A digital dollar that compromises on these values risks undermining the credibility of the broader US financial system. It would also hand a propaganda victory to rival nations promoting state-controlled digital currencies as the future of money.
Embedding American Values in Digital Design
A well-structured digital dollar would not only meet functional requirements but also serve as an institutional expression of American governance. That means embedding key constitutional and economic principles into its architecture.
1. Privacy
Perhaps the most crucial issue is transactional privacy. A digital dollar must not become a tool of mass surveillance. Unlike private cryptocurrencies, a CBDC could, if misused, allow the state to track every payment, eroding Fourth Amendment protections. Privacy-by-design features, such as offline transaction capabilities and zero-knowledge proofs, must be incorporated to protect user anonymity—within legal limits—without compromising national security.
2. Open Market Access and Innovation
The US has historically supported a decentralised, competitive financial sector. A digital dollar must not crowd out innovation in payments, fintech, or decentralised finance. It should operate alongside private systems, not replace them. Open APIs, interoperability standards, and clear limits on the role of the central bank in consumer-facing services can ensure that private-sector innovation continues to flourish.
3. Rule of Law and Due Process
Programmable money offers new possibilities—but also new risks. If a digital dollar can be frozen, reversed, or deactivated at the discretion of administrators, the door opens to arbitrary action. There must be legal safeguards to ensure that such actions are subject to judicial oversight and constitutional protections. Otherwise, the digital dollar could violate the due process rights it is meant to support.
4. Transparency and Institutional Accountability
Trust in the digital dollar will rest on the integrity of its governance. That requires transparency about its technical architecture, issuance rules, and data access protocols. Any digital dollar infrastructure must be subject to legislative oversight, with independent audits and public reporting. Political neutrality and operational independence—core tenets of the Federal Reserve—must be maintained.
The Risks of Getting It Wrong
If these principles are not embedded from the start, the risks are significant. A poorly designed digital dollar could erode public trust, suppress adoption, and generate political backlash. Worse, it could legitimize authoritarian models of digital money that prioritise control over freedom. If Americans begin to fear that their financial privacy and autonomy are being compromised, the entire project could stall or collapse.
There are also international implications. If global markets perceive that the US has created a digital currency vulnerable to political interference or systemic bias, the dollar’s role as a global reserve asset could be weakened over time.
A Blueprint for Responsible Innovation
To avoid these outcomes, the digital dollar must be developed through a process that includes meaningful consultation with civil liberties groups, legal scholars, technologists, and the public. Privacy protections should not be added later—they must be integral to the system. Congress, not just the Federal Reserve, should play an active role in setting the legal framework. Pilot programs should test not only the functionality but also the values alignment of the system under realistic conditions.
A well-designed digital dollar would offer financial inclusion without sacrificing privacy, enable real-time payments without limiting competition, and enhance monetary policy tools without extending government control over individual behaviour. These are high standards, but they are necessary if the US wants to lead, rather than follow, in the evolution of sovereign digital currencies.
Conclusion
The debate over a digital dollar is not just a technological or monetary issue—it is a test of national character. The US has a rare opportunity to set a global example: to show that it is possible to modernise currency without abandoning the values that have long made the dollar a symbol of economic liberty and legal protection.
As the world moves toward digital money, the United States must ensure that its version does not simply replicate the features of authoritarian systems in new packaging. The digital dollar must be different because America is different. Its design must not only work—it must reflect who we are.
Author: Gerardine Lucero