Bitcoin

The Federal Reserve Bank of Cleveland reveals details of digital dollar research

The President and CEO of the Federal Reserve Bank of Cleveland revealed details of the current Fed investigation into a potential digital dollar.

Speech in a keynote address on September 23 Loretta Mester stressed that The Federal Reserve has been researching central bank digital currencies (CBDC) since before the pandemicand noted that its Board of Governors “has built and tested a number of Distributed Ledger Platforms (DLT) to understand their potential benefits and tradeoffs.”

He also highlighted the initiatives of the regional branches of the Federal Reserve to including a multi-year partnership between the Massachusetts Institute of Technology (MIT) and the Boston Federal Reserveand the collaboration between the New York branch of the Federal Reserve and the Bank for International Settlements.

The Federal Reserve Bank of Cleveland reveals details of digital dollar research
The Federal Reserve Bank of Cleveland reveals details of digital dollar research

Despite ongoing investigations Mester said the initiatives “do not signal a decision by the Federal Reserve to adopt the currency”.and added that issues related to “financial stability, market structure, security, data protection and monetary policy should be better understood”.

Mester noted that the Covid pandemic has significantly disrupted America’s “critical infrastructure” such as payments has led to significant changes in the patterns and volume of domestic transfers::

“The spread of COVID-19 increased the reliance of businesses and individuals on digital services and faster connectivity as many employees worked from home and consumers turned to online shopping.”

Looking to the future, Mester emphasized the importance of “Make the necessary investments to ensure that the US payments system can withstand extreme stress events.”.

Mester’s speech comes two weeks later The central bank of the Bahamas announced that the nation would be the first country to establish a CBDC. This shows that the digital currency “Sand Dollars” will be introduced domestically in October.

However, Many analysts criticize the prospects of success of CBDC initiativesand the economist John Vas described state-backed virtual currencies as “Taking a defensive stance” against threats Decentralized crypto assets call into question the longstanding hegemony of governments over monetary policy.

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