By Shelly Melancon (Switzerland)
The United States Federal Reserve has revealed that it would soon disclose some documents, x-raying the costs and benefits of the Central Bank Digital Currency. On Wednesday, Fed Chairman Jerome Powell said that the Fed would notify the public of its findings on what they think about e-Currency and its implications.
The crypto community and the stakeholders in the traditional financial systems across the world are eager to find out the full content of the Fed’s research on CBDC. The reports were initially scheduled to be released over the summer after it was disclosed that policymakers and the financial bodies held several meetings. Digital assets enthusiasts are anticipating the result as the topic of e-Currencies continues to trend globally.
The Stability of the U.S. Payment System Remains a Priority
While stating that the Fed hasn’t made a decision yet concerning the issuance of the digital dollar, Powell revealed that the priority of the Fed is to ensure that the U.S. payment system isn’t affected and remains stable. Following the end of a two-day meeting on the central bank’s monetary policies, the Fed Chair said that they are working proactively to determine if the United States will go ahead with issuing a CBDC and in what form if it’s agreed.
He told news reporters that if the benefits of having digitized dollar are tangible, outweighs the risks, and doesn’t come at the expense of the financial sector and the economy, then the Fed will go ahead and pilot its CBDC. According to him, this is the ultimate test in accessing the DC.
The Paper Will Address Some Public Uncertainties Regarding a CBDC
Powell stated that the much-anticipated paper would address some policy issues and uncertainties regarding the central bank’s DCs and lay a foundation for the central bank to get feedback from the public and the legislators on any issue encountered. The Chair is currently planning to undertake a research project with the Institute of Technology in Massachusetts to look into how the CBDC could be developed. The initial phase will begin soon.
The Fed clarified that e-Currency differs from cryptocurrencies like Bitcoin and Ethereum, pointing out that Bitcoin and Ethereum are decentralized and are incredibly volatile. eCurrency will be issued by the Central Bank, although the precise structure hasn’t been determined yet. The digital currency will maintain a parity value with banknotes and holders will have a direct claim on the central bank.
The Fed officials have diverse opinions regarding CBDC. While some say that the United States should lead in the area where countries like China are already becoming a dominant force, others, including the Fed Vice Chair Randal Quarles, said that they are uncertain about the benefits outweighing the costs. However, Powell has reiterated that the United States isn’t behind, but it’s essential that things are done rightly rather than acting rashly.
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