The US Federal Reserve recently took a step toward developing a national digital currency as the bank announced its plans to publish a research paper on the subject, as reported by Reuters. The Federal Reserve is publishing a paper with an aim is to gather public comment and get the US to play a “leading role” in the development of international standards, Fed chairman Jerome Powell revealed in a video message.
Federal Reserve will seek public comment on CBDC.
“To help stimulate broad conversation, the Federal Reserve Board will issue a discussion paper this summer outlining our current thinking on digital payments, with a particular focus on the benefits and risks associated with CBDC in the US. context,” the Fed chairman said. “As part of this process, we will ask for public comment on issues related to payments, financial inclusion, data privacy, and information security.” The announcement takes the concept of a “digital dollar” from a small research project into something potentially larger.
Central banks continue to explore CBDCs options.
Central banks across countries are actively exploring central bank digital currencies. The People’s Bank of China would be the most powerful central bank in the world that is launching its national digital currency. The central bank has been working on its digital yuan for more than half a decade and is now close to issuing it to the general public. The PBoC has already conducted several successful pilot projects. With its new research paper on CBDC, the US Federal Reserve aims to explore how “central bank digital currencies” or CBDCs could fit into the US banking system. The Fed is likely trying to accelerate work toward a potential US digital currency as other nations, particularly China, are farther along.