Crypto fans have long hailed a digital US dollar as the panacea for all the current economic ills. It looks like the United States Federal Reserve has answered the prayers and researching on a digital US dollar.
The Federal Reserve Board of Governors is working towards a virtual greenback. A proposal has outlined that US citizens can transact digital US dollar via an active account directly with the Fed. Multiple research projects are currently underway to digitize the reserve currency of the world.
Extensive research underway for US central bank digital currency
Loretta J. Mester of the Federal Reserve Bank of Cleveland shared her views at the 20th Anniversary Chicago Payments Symposium. She stated how COVID-19 had increased the growth of the digital economy and virtual transactions. Initially, the virtual greenback can be held in Federal Reserve accounts as liabilities for emergency scenarios.
Another loftier proposal suggests creating a fully digital US dollar equivalent to today’s printed cash – a dream come true for the crypto enthusiasts. Virtually issued cash promises more transparent and speedier transactions with a fair bit of anonymity. Certain proposals have recommended directly depositing digital money into the citizen’s wallets, bypassing the commercial banks. Mester mentioned that the authorities are studying the various concerns surrounding CBDCs today.
Digital US dollar project on a fast track
Techlab, a research lab under the guidance of the Federal Reserve Board of Governors, is paramount in the development and research of CBDCs besides other virtual payment experiments. Massachusetts Institute of Technology (MIT) and Federal Reserve Bank of Boston have joined hands for research on the virtual US dollar.
Lael Brainard, Federal Reserve Board Governor, emphasized the importance of the dollar in the world economy. Hence, it is pertinent that greenback stays at the forefront of financial innovation. Central banks must keep pace with evolving payment technologies.
The Bank of International Settlements has entered into a partnership with the New York Federal Reserve Bank for research on next-gen economic technologies.