Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
On Tuesday, January 20, the U.S. central bank aka the Federal Reserve kickstarted the debate about the central bank digital currency (CBDC) aka Digital Dollar by releasing a new whitepaper.
This is quite a healthy development considering the fact that other developed economies have already taken a lead in pursuing CBDC projects. In a statement on Tuesday, Fed Chairman Jerome Powell said:
âWe look forward to engaging with the public, elected representatives and a broad range of stakeholders as we examine the positives and negatives of a central bank digital currency in the United Statesâ.
The paper just talks about the benefits, downsides, and potential costs involved. However, it doesnât necessarily talk about whether the Fed should pursue such a project. The Fed has made it clear that it wonât proceed for a CBDC âwithout clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.â
Few Details About Digital Dollar And Challenges
As per the whitepaper, the CBDC would differ in some key ways from how traditional digital payments work in America. While digital transactions are currently funneled through traditional banks, that would not necessarily be the case with CBDCs.
The Digital Dollar will serve as a digital token with a direct claim from the central bank. However, this is somewhat similar to how physical dollars are all âFederal Reserve Notesâ held by the bearer. However, the Fed paper notes that they would be following an âintermediate modelâ wherein banks and payment firms could create accounts or digital wallets.
Some of the Fed officials also stressed the challenges that come along with launching a CBDC in the market. The Fed officials wrote:
âWhile 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. Challenges include maintaining financial stability and making sure the digital dollar would âcomplement existing means of paymentâ.
The officials further called the need of implementing some policy regulations to protect Americansâ privacy with the ability to combat illicit finance.
Citing the CBDC development by other nations, Fed Governor Lael Brainard stressed that the U.S. has to start working soon on the CBDC rather than holding off.
The post U.S. Fed Releases New Whitepaper for CBDC Digital Dollar, Kickstarts Debate appeared first on CoinGape.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.