Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
The Federal Reserve Bank has been exploring digital currencies to modernize the U.S. payments sector.
The President and CEO of the Federal Reserve Bank of Cleveland has revealed details of the Fedās ongoing research into a potential digital dollar.Ā
Speaking in a keynote address on September 23, Loretta Mester emphasized that the Federal Reserve has been exploring central bank digital currencies (CBDC) since before the pandemic, noting that its Board of Governors has been ābuilding and testing a range of distributed ledger platforms to understand their potential benefits and tradeoffs.ā
She also noted initiatives from regional Federal Reserve branches, including a multi-year partnership between the Massachusetts Institute of Technology (MIT) and the Boston Fed, in addition to collaboration between the Fedās New York Branch and the Bank for International Settlements.Ā
Despite the ongoing research, Mester asserted that the initiatives do not āsignal any decision by the Federal Reserve to adopt such a currency,ā adding that issues related to āfinancial stability, market structure, security, privacy, and monetary policy all need to be better understood.ā
Mester noted that the Covid pandemic has resulted in significant disruptions to ācrucial infrastructureā of the U.S., such as the payments sector, and had resulted in major changes to the patterns and volume of domestic transfers:
āThe spread of COVID-19 heightened the reliance of businesses and individuals on digital services and faster connectivity, as many employees began to work from home and consumers turned to online shopping.āĀ
Looking ahead, Mester emphasized the importance of āmaking necessary investments to ensure that the U.S. payments system remains resilient in the face of extreme stress events will need to remain a priority.ā
Mesterās speech comes two weeks after the Central Bank of The Bahamas announced the archipelago nation was aiming to become the first country to launch a CBDC, revealing that itās āSand Dollarsā digital currency will be launched nationwide in October.
Many analysts are critical of the prospects of success for CBDC initiatives however, with economist John Vas describing state-backed virtual currencies as āa defensive postureā against the threats posed by decentralized crypto assets to governmentsā long-standing hegemony over monetary policy.
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.