The US Federal Reserve publishes its highly-anticipated review paper on central bank digital currencies, also commonly referred to as CBDCs.
Source: Federal Reserve
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The Federal Reserve found out that a CBDC could provide a “safe, digital payment option for individuals and businesses, and provide faster payment options between countries.”
A CBDC is a digital asset linked to the value of a fiat currency, the US dollar that is used by a country’s central bank.
Meanwhile, the report also indicated that CBDCs could pose some risks, including risks to financial stability.
The development of a CBDC would change the financial industry’s market structure, change reserve management programs and monetary policies, and have a significant impact on privacy and security.
The Federal Reserve’s published paper aims at exploring the pros and cons of a digital currency, but not to take a stance on whether the CBDC should be launched.