The Federal Reserve is stepping into the digital dollar debate. On Thursday, the US central bank released a report assessing “the pros and cons” of such a project. It is “the first step in a discussion to determine if, and how, a central bank digital currency could improve the security and efficiency of the national payment system,” the Fed says.
She makes it clear that she does not favour any option at this stage but calls on all those interested in the subject to share their comments by May 20, with a questionnaire in support. The Boston Federal Reserve should also soon publish a study on the technological tools needed to implement a digital dollar.
Jerome Powell, who is to begin a second term as head of the Fed, has always raised the subject with caution, assuring for months that the United States had time to decide the question. Other countries are moving faster, particularly China, which is accelerating the deployment of its e-yuan.
Central bank digital currencies are seen as a new asset class, which could compete with traditional banks that have long held and moved money in digital form. The Fed also points to the need to examine “how to preserve the privacy of citizens and maintain the ability to combat illicit financing”.
Among the advantages, a digital currency could on the other hand “provide households and businesses with a convenient and electronic form of central bank money, with the security and liquidity that this implies”, or “offer entrepreneurs a platform on which to create new financial products and services,” its report notes. It could also “promote faster and cheaper payments (including on cross-border payments) and broaden consumer access to the financial system”.
This article was originally published on Naija News