Fed to launch broad debate on digital dollar this summer, says Powell
The Federal Reserve will step up its exploration of the digital dollar later this summer, Federal Reserve Chairman Jerome Powell said on Thursday.
In order to “help stimulate a broad conversation,” the Fed will release a discussion paper this summer outlining the central bank’s “current thinking” on digital payments and the benefits and trade-offs of a central bank digital currency, or CBDC, Powell said in a statement. .
The Fed has been exploring the benefits and tradeoffs of a digital currency for several years now, Powell said.
Last summer, a team from the Boston Fed began working with researchers at the Massachusetts Institute of Technology to find out what it would take to build a digital currency backed by the United States.
A Fed-backed digital dollar would not be a cryptocurrency based on decentralized blockchain, the ledger-based technology that underpins traditional digital currencies like bitcoin BTCUSD,
It would simply be a digitized form of the fiat dollars that the Fed issues and that Americans are most familiar with, essentially antithetical to assets like bitcoin, in the eyes of cryptocurrency purists.
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China recently made headlines when it rolled out tests on a new digital yuan.
In his post, Powell stressed that any potential digital dollar will not replace cash or current digital forms of the private sector dollar, such as deposits in commercial banks.
Progressive Democrats see creating a “digital dollar,” along with accounts for every American at the central bank, as ways to help poor Americans who don’t have access to the banking system.