Nuked A digital dollar backed by the US government might lead to faster money transfers, according to a new paper from the Federal Reserve. The paper is based on a paper from CNBC.
The paper is meant to act as’the first step in a discussion,’ but does n’t advocate for actually creating a’central bank digital currency’. Potential downsides could include making commercial banks less attractive to consumers.
The paper is a step toward the existence of a digital dollar. Around 90 other countries are considering their own digital currencies.
The government is looking to keep supporting the’dominant international role of the U.S. dollar’. Doing its research in public could help the government make it easier for other companies to design systems compatible with the US’s.
A digital currency from the central bank could combine some of the benefits of federally-backed cash and privately-controlled digital money.
The government would have to address the market’s reaction to the US taking over a role traditionally served by commercial banks. It would also require citizens to trust the government directly with all their financial info.
The Fed makes clear that no specific design or technology has been proposed yet.’will continue to explore a wide range of design options,’ the Fed said.
The reserve is experimenting with and exploring centers, blockchain, and distributed methods of making a currency. If the central bank were to create a digital currency, it would have to be’privacy-protected, intermediated, widely transferable, and identity-verified’.
