Review of US Federal Reserve Report on National Digital Currencies; Is the digital dollar on the way?
The US Federal Reserve finally released its report on national digital currencies after months of waiting and delays. The report also cites China blockchain technology, decentralized digital currencies and stable coins.
To Report The Federal Reserve Crypto Briefing has generally concluded that national digital currencies can be a viable option for using secure digital payments for a variety of individuals and businesses. According to the same report, national digital currencies can be used as an option for fast international payments. The national digital currency, or “CBDC”, is the digital example of a country’s official currency and is exported by central banks.
The Federal Reserve has said that national digital currencies may also have negative aspects and endanger the country’s financial stability. According to the government, the launch of the national digital currency changes the structure of the money market, the management of the treasury and the monetary policy of the country, and has consequences for the issue of privacy and security.
The recently released Federal Reserve report is not specifically about taking a stand for digital dollars, but examines most of the pros and cons of national digital currencies.
Refers to the Chinese blockchain, decentralized digital currencies, and stable coins
National digital currencies are not necessarily blockchain-based and may not even use cryptographic technology; But the Fed has mentioned both of these technologies several times in this report.
The US Federal Reserve is said to be involved in experiments using national blockchain-based digital currencies. It also emphasizes that the Federal Reserve in Boston is partnering with MIT’s Digital Currency Initiative, which specializes in digital currencies. In addition, the team’s technology lab is researching large payments and interbank settlements using distributed general office technology.
The Fed also cited decentralized digital currencies and stable coins as historic developments in digital payments, but also said that discussing these technologies was “beyond the scope of this report.” The central bank then referred readers to another report on the Stables, published by the US Presidential Financial Markets Working Group in November 2021. The working group consists of members of the Office of Foreign Exchange Control (OCC) and the US Federal Deposit Insurance Corporation (FDIC).
Also read: Complete list of countries with national digital currency + Legislative status
The Federal Reserve’s condition for launching a digital dollar
Many people have been looking forward to reading this report since May 2021, when US Federal Reserve Chairman Jerome Powell said the report would be released this summer.
However, the publication of this report was repeatedly delayed. In July, its release was postponed to September. In October, many expected the report to be released soon, according to the Wall Street Journal, but it was postponed again.
Jerome Powell said this month that a report on national digital currencies would be released “in the next few weeks,” and finally last week, the Federal Reserve was able to deliver on its promise.
Of course, the release of this report does not necessarily mean that the Federal Reserve wants to offer a stable dollar coin. The Fed will continue to listen to public opinion, saying it will only launch digital dollars if there is public support for the technology and several ministries agree to implement the plan.