DIGITAL DOLLAR: The Federal Reserve is asking for public comments on CBDC design and implementation
The US Federal Reserve has published a study examining the potential benefits and risks of issuing an American central bank digital currency (CBDC) as the first step in a public consultation on the possible future issuance of a digital dollar.
Money and Payments: The US Dollar in an Age of Digital Transformation lays out the findings of the central bank’s research into CBDCs to date and invites public comment from “a wide range of stakeholders that might use a CBDC or be affected by its introduction” on a series of specific questions relating to both policy considerations and the potential technical design and implementation of a digital dollar.
The study identifies the ability to meet future needs and demands for payment services, improvements to cross-border payments, support for the US dollar’s international role, financial inclusion and extending public access to safe central bank money as the key benefits offered by a US CBDC.
It also examines how the issuance of a digital dollar might impact US financial structures, the implementation of monetary policy, privacy protection, cybersecurity and operational resilience.
“The Federal Reserve’s initial analysis suggests that a potential US CBDC, if one were created, would best serve the needs of the United States by being privacy-protected, intermediated, widely transferable and identity-verified,” the study says.
The 40-page paper “is not intended to advance any specific policy outcome, nor is it intended to signal that the Federal Reserve will make any imminent decision about the appropriateness of issuing a US CBDC,” it adds.
The initial phase of the online public consultation will run until 20 May 2022.
The US Federal Reserve is part of a working group of seven central banks and the Bank of International Settlements that published a set of ground rules for the successful issuance of CBDCs in October 2020.
US Federal Reserve launches public consultation on digital dollar was written by Tom Phillips and published by NFCW.