Federal Reserve Officially Experiments Digital Dollar
Main page News, Fintech, dollar, US Market, US, CBDC

Member of the US Federal Reserve's Board of Governors Lael Brainard officially admitted that the Fed is testing "a hypothetical digital dollar" for research purposes.

However, the regulator has not yet committed to issuance that would require a formal policy process involving the government and other stakeholders, Brainard added.

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The central bank official says research teams from the Boston Fed and Massachusetts Institute of Technology are working in a "multi-year effort to build and test a hypothetical digital currency oriented to central bank uses."

"...the Federal Reserve is active in conducting research and experimentation related to distributed ledger technologies and the potential use cases for digital currencies," she added.

Brainard also pointed out that central bank digital currencies (CBDC) also present risks "associated with privacy, illicit activity, and financial stability."

Brainard highlighted that the existence of stablecoins with potentially global reach, such as Facebook's Libra, have raised "fundamental questions" on legal and regulatory safeguards, financial stability, and the role of currency in society.

Earlier this year, Christopher Giancarlo, a former chairman of the US Commodity Futures Trading Commission (CFTC), said that the Fed should launch a digital dollar.

Digital Dollar Removed from Bill to Stimulate US Economy

The Fed must issue a digital currency in order to compete with China’s CBDC, Giancarlo said during the Yahoo! Finance On the Move program.

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