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The Fed thinks of flipping a digital coin

Developing central bank digital currency

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Digital Currency // Illustration by Kate Walker

The Fed thinks of flipping a digital coin

 

Future. The U.S. Federal Reserve announced that it will publish a paper that will explore the complexities of developing central bank digital currency (CBDC) and hopefully help chart the course for international standards. The U.S. doesn’t want to rush the creation of a digital dollar, but it may want to control the conversation after China announced that it’s already beta testing a digital yuan and has effectively banned the use of cryptocurrencies in the country.

Digitize the dollar
The Fed is weighing the risks of taking the dollar digital.

  • It announced that it’s planning to publish a research paper on the pros and cons of CBDCs.
  • The goal of the paper is to start a public discourse and to set the stage for the U.S. to play a “leading role” in developing international standards for digital currency use.

Fed chairman Jerome Powell said that he wants the public to comment on “issues related to payments, financial inclusion, data privacy, and information security.”

Powell seems to be taking a measured approach to CBDCs, but the pressure is on as other (less democratic) countries pick up the pace. China announced last December that it’s already working on a digital yuan and that it has already given some out in a lottery to test.