If you can’t beat them, join them.
That appears to be the rationale behind yesterday’s announcement from the U.S. Federal Reserve that it is exploring the possibility of issuing its own central bank digital currency (CBDC). This preliminary action by the U.S. government comes nearly three months after China began rolling out its own digital currency, becoming the first major economic power to do so.
It’s clear from the statement that Federal Reserve Chairperson, Jerome Powell, wants to take a measured approach and that a CBDC would not replace the U.S. dollar.
We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks,” said Powell. “The design of a CBDC would raise important monetary policy, financial stability, consumer protection, legal, and privacy considerations and will require careful thought and analysis—including input from the public and elected officials.
The Fed’s press release went on to state that it’s not rushing into any immediate actions on the currency front, rather it plans to publish a “discussion paper” later this summer that will evaluate the implications and consequences of deploying a “…fast-evolving technology for digital payments.” Despite this plodding response to “fast-evolving” tech, Powell stated that a key focus of the discussion paper will be laying out the pros and cons of issuing a Fed-sanctioned CBDC.
The statement also noted that this exploratory discussion paper is only part of a broader research initiative that the Fed is conducting into cryptocurrencies as a whole, and that the Federal Reserve System is also collaborating internationally in groups such as the Bank for International Settlements’ CBDC coalition.
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Source: Cryptocurrency - investing.com
