Digital currency is already necessary, and is also already here.

Taking myself as an example, of all the actual money I currently own (so, not counting securities and whatnot, just cash and bank account balances), approximately 99.5% of it is currently digital and 0.5% of it is analog. And 100% of that is US dollars. And I'm unusually heavily invested in portraits of Andrew Jackson right now; it's typically more like 99.9% digital.

At present, I'm quite happy with USD for my digital currency needs because it offers me greater convenience and lower transaction fees than the available alternatives. One particularly compelling feature is that it's easily convertible to physical currency (and always at a nice, predictable 1:1 exchange rate), which remains the only game in town when I want to make a truly anonymous transaction. For example, when I give money to a pahnandler, I really don't want there to be any paper trail that the person I'm giving money to can possibly trace back to me.

Digital currency already exists, but with the much less sexy name of "bank accounts", "checks", "debit cards", and "wire transfers". The only thing that cryptocurrencies bring to the table is trustlessness, but that is what introduces the inefficiencies of cryptocurrencies, and prevents useful features such as reversible transactions in the case of fraud.

I think GP is merely referring to the idea not that Crypto Currencies AGMI, but that the Fed/Gov are allowing it all the happen so the research/investment is made to get the technology to the point that a PoST/PoS/(Solana|Cardano|Etherum|etc.) system exists as a reference point to create "FedCoin" featuring centralized control by the fed, but decentralized and trustless processing beyond that.

A system that is powered by crypto making payments and etc basically free, but with the ability to reverse fraud transactions or similar. They have their own goals/constraints that are different than crypto currencies today. Another comment refers to a universal API; even if the API is JUST for settlement between banks it would probably make things way simpler, cheaper, and more efficient.

edit: typo, added universal api comment agreeing with comments from kasey_junk

This was my position until very recently as well but I’ve recently been convinced otherwise.

The trust stuff is actually the least interesting part (though perhaps a prerequisite for it).

The interesting part is the potential for a “universal” api. Instead of having to integrate with every financial institution to support the myriad payment methods out there you can support the crypto currency. That’s a big deal.

It’s not what the crypto libertarians are pitching and I still believe that governmental currency controls will always be a thing but standardizing the actual mechanics of money movement would be huge.

>>The interesting part is the potential for a “universal” api.

This is true both at the application level and the software standards level. An example of the first would be Uniswap. Any one in the world can access this exchange, both for listing tokens, and for trading them, and it is guaranteed to never shut down, as long as the Ethereum network and blockchain exists. This is absolute universality in terms of APIs.

In terms of software standards, the EVM is already used by multiple blockchains, which makes them all share the same address format out of the box, and compatible with software like MetaMask that has tens of millions of installations. I could send Ethereum tokens to your Polygon (an EVM based chain) address, and you would be able to use your Polygon Chain private key to access them. All that you would be required to do is go to MetaMask and switch your network from Polygon to Ethereum mainnet, and the tokens would be appear in your wallet interface.

>>It’s not what the crypto libertarians are pitching and I still believe that governmental currency controls

Government currency controls cannot be a thing any more. Monetary transactions dependent solely on cryptographic authentication, and published to a completely decentralized and immutable platform, totally unmoors money from the types of bottlenecks that state actors could use to control its flows. To control currency requires controlling the flow of information now, and with the universal adoption of the internet, that is not happening.

At least in the US, I'm of the opinion that the government leaning into "stablecoins", and letting private industry launch several different versions of these is the best path forward (and most likely path).

They have realized it, which is why they've all been using digital currencies for the past 40 years.