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Fed Delivers Long-Awaited Report on Pros and Cons of a Digital Dollar

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Sign table of the Federal Reserve Bank of New York, USA. The New York Fed implements monetary policy, supervises and regulates financial institutions and helps maintain the nations payment systems

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.

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