The Federal Reserve is getting serious about digitizing the dollar. The rise of cryptocurrency and the adoption of governments such as El Salvador has lit a fire under the United States to avoid getting left behind.
One might argue that the dollar is already digital given that less than 4% of the money in the American economy exists in paper form. The rest is an agreed-upon set of numbers on bank statements. But that >96% is not digitized like a blockchain currency. It is digitized on bank servers. A crypto dollar would be easier to hold and use for people without bank accounts. The people who cannot afford bank fees and bank transfers would suddenly find themselves with a lot of options that they never had before.
That is why the big banks hate this idea and will employ the full force of their lobbyists to prevent it. Full crypto adoption would end the business as they know it. Congress would have to approve a transition to a digital dollar but there is a bipartisan appetite in Congress for this.
One lingering question about digital currency is around expansion. Current cryptocurrencies are finite. There will only ever exist a certain amount and more cannot be made. The U.S. dollar enjoys unlimited printing by the government, much to its detriment. Would the U.S. give up the ability to make itself more money if it adopted a blockchain currency? Hard to imagine!