Fed Inches Closer to Developing Central Bank Digital Currency

The Epoch Times

The Federal Reserve has announced it is taking a step closer to the potential adoption of a central bank digital currency (CBDC) by ramping up its efforts to study the use of fast-evolving technologies for digital payments, with a particular focus on the opportunities and risks associated with this new type of digital dollar.

โ€œTechnological advances are driving rapid change in the global payments landscape,โ€ the Fed said in a statement, adding that it is actively exploring how it might refine its role as a core payment services provider and as the issuing authority for U.S. currency, while promoting monetary and financial stability, as well as the safety and efficiency of the payment system.

โ€œIn pursuit of these core functions we have been carefully monitoring and adapting to the technological innovations now transforming the world of payments, finance, and banking,โ€ said Federal Reserve chair Jerome Powell, in a video address Thursday (pdf).

Inspired by Bitcoin, an essentially non-regulated virtual currency that uses a decentralized digital ledger technology known as a blockchain to validate and secure transactions, central banks around the world have been mulling the adoption of a CBDCโ€”a new type of central bank liability issued in digital form. Central bank digital currencies would use a similarโ€”though centralizedโ€”electronic record or digital token to represent the virtual form of a fiat currency, which would be issued and regulated by the authorities.

Powell said the Fed plans to publish this summer a discussion paper that will explore the implications of fast-evolving technology for digital payments, with a particular focus on the possible issuance of a U.S. central bank digital currency for use by the general public.

โ€œWe think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks,โ€ Powell said. โ€œThe design of a CBDC would raise important monetary policy, financial stability, consumer protection, legal, and privacy considerations and will require careful thought and analysisโ€”including input from the public and elected officials.โ€

BYย TOM OZIMEK

Read Full Article on TheEpochTimes.com

Chair Powellโ€™s Message on Developments in the U.S. Payments System PDF

payment-innovation-message-transcript-20210520

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