Digital currencies are definitely on their way to modernize the US payments sector – and the Federal Reserve Bank recently revealed its details on the digital dollar research. As we can see from the President and CEO of the bank who is featured in the crypto news today, details of the Fed’s ongoing research show some great insights.
It all started when Loretta Mester spoke in a keynote address on September 23. The President and CEO of the Fed emphasized that the Federal Reserve Bank has been exploring central bank digital currencies (CBDC) since before the pandemic, and noted that its Board of Governors has been “building and testing a range of distributed ledger platforms to understand their potential benefits and tradeoffs.”
She also mentioned that there are initiatives from regional Federal Reserve branches, including a multi-year partnership that they have with the Massachusetts Institute of Technology (MIT) and the Boston Fed, all in addition to the ongoing collaboration with the New York Branch and the Bank for International Settlements.
Despite all of this research, Mester noted that the initiatives do not “signal any decision by the Federal Reserve to adopt such a currency,” adding that issues related to “financial stability, market structure, security, privacy, and monetary policy all need to be better understood.”
She also talked about COVID-19, noting that this pandemic has resulted in many disruptions both to the Federal Reserve Bank as well as changes in the “crucial infrastructure” of the US such as the payments sector, and had resulted in major changes to the patterns and volume of domestic transfers.
“The 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.”
Looking ahead, she emphasized the importance of “making 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.”
What is interesting is that this speech comes two weeks after the Central Bank of the Bahamas announced its launch of a CBDC, revealing that its “Sand Dollars” digital currency will be launched in October.
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