The Federal Reserve (Fed) is looking at issuing its own digital currency
According to information released by Governor Lael Brainard yesterday, the Federal Reserve (Fed) seems to be looking at a range of issues surrounding digital currency and payments. This includes policy, design, and legal considerations surrounding its potential to issue a cryptocurrency.
Lael Brainard, Federal Reserve Governor with the Stanford University’s business school dean Jonathan Levin in Palo Alto. Source: Reuters
Fed open arms with digital currency?
Brainard’s share shows that the Fed is more open to its ability to create a digital currency than before.
In a payment conference at the Stanford Graduate School of Business, Brainard said:
“By converting payments, digitization is likely to bring more excellent value and convenience at a lower cost. However, there are certain risks when we mention anxiety. Concerns of global central banks and other global central banks on the rise of digital payment systems and private currencies, including the Libra digital currency project. of Facebook.”
Nevertheless, Brainard did not mention current interest rates or economic prospects.
Lael Brainard, Federal Reserve Governor
“Some new players are outside the protective barrier of the financial system, and their new currencies can pose challenges in areas such as illegal finance, privacy, financial stability. and convey monetary policy.”
As Bitcoin grows, central banks around the globe are probably worried about the dominance of this new monetary system. Surname
are debating how to manage the digital financial technology and distributed ledger systems used by Bitcoin, promising almost instant payments at a low cost.
At the moment, the Fed is also developing its real-time payment service and is currently reviewing the 200 comment letters sent late last year on the design and scope of the proposed facility.
However, conducting research and testing related to distributed ledger technologies and their potential use cases for digital currencies is another major issue. This includes the potential for a CBDC (central bank digital currency).
Facebook’s Libra project is still being compared
Dozens of central banks across the globe are doing the same job as the Fed. In particular, as AZCoin News reported, China is planning to issue a digital currency.
In the past, the Fed seemed to have tried to convince people that the world didn’t need such a currency. But that was before Facebook’s ambitious project of global stablecoins became widely known. At the time, Fed officials, including Brainard, raised concerns about consumer and data protection and privacy threats that could be created by a currency that had can be used by a third of the world’s population to have a Facebook account.
At the same conference, Brainard said that Facebook’s Libra project conveyed the urgency and need for digital currencies. She revealed that the Fed is working with other central banks as it continues to improve its central bank’s understanding of digital currencies.
With many countries looking to issue their digital currencies, the community has every reason to ask the Fed to take the lead in both policy research and development.
In the United States, issues to be investigated include whether a digital currency will make the payment system safer or simpler and whether it could pose a risk to financial stability, including The bank’s ability to operate if a single scan can convert the money into the central bank’s digital currency.
Other issues include privacy and fraud protection, and even if the coin is considered legal.
“In the United States, no less than other major economies, the public sector needs to actively engage with the private sector and the research community to see if new protective equipment needs to be established, whether existing legal rings need to be redrawn or not. CBDC will bring essential benefits online.”
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