Digital Dollar's Benefits Could Affect Financial Stability & Privacy: US Fed
The US Federal Reserve said that the introduction of an official digital version of the U.S. dollar could benefit Americans but it may also potentially affect financial stability and privacy.
Although the Fed's long-awaited discussion paper did not make any policy recommendations nor did it give a clear signal for the launch of a central bank digital currency (CBDC), it did provide an insight saying that the digital US dollar could provide Americans with more payments options that are speedier.
The Fed also said that it is not ready to proceed with creating a CBDC, a digital form of cash, «without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.» But the talks have set a stage for the central bank to collect public feedback on the potential costs and benefits of a CBDC, which could ultimately advance legislation long-term, Reuters reported.
The discussion comes at a time when central banks across the globe are already exploring the adoption of digital currencies, while countries like Nigeria have already launched their own version of a CBDC known as eNaira.
«While a CBDC could provide a safe, digital payment option for households and businesses as the payments system continues to evolve, and may result in faster payment options between countries, there may also be downsides,» Fed officials wrote.
According to the Fed, challenges surrounding the digital dollar include maintaining financial stability and creating an ecosystem that would «complement existing means of payment.»
Prior to the introduction of the digital dollar, other obstacles that need to be tackled by the central bank are major policy questions such as ensuring a CBDC does not violate Americans'
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