When Treasury Securities Went Digital

Who remembers when US Treasury securities went digital? Not many of us, because it happened around 50 years ago. So, should we be surprised at the idea of currency going digital? Here's the story.

By the 1960s, the costs of transporting and processing physical Treasury Bills, Notes, and Bonds were becoming untenable. So, explorations were made that led to the adoption of the book-entry system and the use of CUSIP numbers.

In 1971, the Treasury began transitioning physical (definitive) securities into digital ones. This began with Treasury Bills and was slowly expanded to include Notes and Bonds.

During the transition, both definitive and digital securities were issued. (See the Treasury Note pictured.) And, definitive securities would bear the CUSIP number. This was a hybrid, transitional security able to work in both worlds.

Given that 50 years ago the Treasury was issuing hybrid definitive/digital securities, is it such a stretch to believe that it, the Fed, or a stablecoin could do the same with currency today by creating a hybrid banknote? Such smart banknotes or cryptobanknotes are regular banknotes that can pass hand-to-hand or connect to an electronic network and move their value electronically.