The Federal Reserve is experimenting with a digital dollar
Digital currencies are definitely on their way to modernize the US payments sector — and the Federal Reserve Bank recently revealed its details on the digital dollar research.
Description: The Federal Reserve Bank has been exploring digital currencies to modernize the U.S. payments sector.
The U.S. Federal Reserve began considering options for creating and distributing a digital dollar (CBDC) even before the coronavirus pandemic. The President and CEO of the Federal Reserve Bank of Cleveland Loretta Mester spoke about this earlier.
She gave a speech last Wednesday, September 23. For the first time the representative of the Federal Reserve confirmed that the developers of the regulator are already creating a platform for processing transactions with token linked to the U.S. dollar.
Mester noted that some services are currently being tested. At the same time, Fed experts assess the risks of launching CBDC.
A partner of the regulator is the Massachusetts Institute of Technology (MIT). Supporters of the implementation of the digital dollar are the Bank for International Settlements, as well as the federal reserve banks of New York and Boston.
However, despite a lot of analytical work, the Federal Reserve is still hesitant to release CBDC. The regulator fears that the appearance of a new instrument in the market could destabilize the financial sector. Mester detailed:
“The spread of COVID-19 heightened the reliance of businesses and individuals on digital services and faster connectivity, as many employees began to work from home and consumers turned to online shopping.”
One of the supporters of early launch of the digital dollar is the former chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo. He noted that the U.S. authorities can use CBDC as a counterbalance to the digital version of the Chinese yuan.
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