U.S. Federal Reserve Will Release Its CBDC Research Paper This Summer While Working on Crypto Regulations
It looks like the U.S. Federal Reserve is finally putting in some efforts on working towards the central bank digital currency aka Digital Dollar as well as having a proper regulatory framework in place for cryptocurrencies.
On Thursday, May 20, Fed Chairman Jerome Powell said that the central bank has been carefully monitoring the developments taking place with the payments innovation. He further added that during the summer of 2021, the central bank will "explore the implications of fast-evolving technology for digital payments, with a particular focus on the possibility of issuing a US central bank digital currency. As the central bank of the United States, the Federal Reserve is charged with promoting monetary and financial stability and the safety and efficiency of the payment system”.
“Technological advances also offer new possibilities to central banks — including the Fed,” Powell said. “While various structures and technologies might be used, a CBDC could be designed for use by the general public.”
The Fed chairman also added that their focus will be on establishing a safe and efficient payment system that bring broad benefits to American households and businesses in addition to promoting innovation.
A month back, the Fed Chairman clarified that the U.S. is in no race with China to issue a CBDC first in the global market. Financial stability is of key importance while rolling out the Digital Dollar and they will take as much time as required.
The Fed Chairman also noted that they are open to views and comments from general public regarding CBDC developments. Powell noted: “We are committed at the Federal Reserve to hearing a wide range of voices on this important issue before making any decision on whether and how to move forward with a U.S. CBDC, taking account of the broader risks and opportunities it could offer. The paper represents the beginning of what will be a thoughtful and deliberative process.”
Referring different distributed ledger cryptocurrencies like Bitcoin, Powell added that they haven’t served as a convenient way to make payments. However, he praised stablecoins - backed by the USD.
"To date, cryptocurrencies have not served as a convenient way to make payments, given, among other factors, their swings in value. Nonetheless, coins tied to the value of the dollar or another currency -- known as 'stablecoins' -- have emerged as a new way to make payments,” he added.
Along with the U.S. many other global economies have kickstarted their efforts on working out for CBDC framework. This includes the Bank of England (BoE) as well central banks of Russia, Sweden, China, Singapore, Thailand, Canada, and many others.