The United States Federal Reserve System is exploring the development of a central bank digital currency and what issues and risks it could potentially pose.
Federal Reserve Board Chairman Jerome Powell provided a response to U.S. Representatives French Hill and Bill Fosters' request on whether the Federal Reserve plans to launch a national digital currency, financial services reporter Zachary Warmbrodt tweeted on Nov. 20.In the letter, Powell set forth the Federal Reserve's views on the creation of a CBDC, emphasizing that, although the agency is not currently developing a CBDC, it has assessed and continues to evaluate the costs and benefits of such an initiative.
Powell revealed that the agency is conducting its own small-scale, research-focused experiments to gain hands-on experience and better understand the opportunities and limitations of CBDCs.
CBDCs raise a range of legal concernsPowell said that prior to issuing a CBDC, the Federal Reserve has to address a number of legal questions, including monetary and payments policies, financial stability, supervision and operational issues, and their vulnerability to cyber-attacks.
"If it is designed to be financially transparent and provide safeguards against illicit activity, a general purpose CBDC could conceivably require the Federal Reserve to keep running record of all payments data using the digital currency and sometimes that raises issues related to data privacy and information security."
"This decision would have far-reaching implications on every aspect of America's monetary policy and requires a deep level of analysis to ensure proper implementation."
Rep. Foster said: "My main concern is that we are not caught flat-footed by fast moving developments in other countries that may put our economy at a competitive disadvantage and threaten the primacy of the U.S. dollar."
US Federal Reserve Exploring Digital Dollar and Its Effect on Monetary System
Published on Nov 20, 2019
by Cointele | Published on Coinage
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