Don’t expect the US Federal Reserve to issue a digital dollar anytime soon. CNBC reports that the Reserve released its long-running study of a central bank cryptocurrency, but took no position on whether or not it should pursue the technology. Instead, the paper explored the benefits and potential pitfalls of digital currencies and asked for public comment.
The Fed has warned that existing cryptocurrencies tend to be highly volatile, consume a lot of energy, and often have significant transaction limitations. A central bank-backed format could overcome some of those problems, the Reserve said, by serving as a “bridge” between payment services, making finance more inclusive and providing “safe and reliable” money. The Reserve also believed that digital currency could improve cross-border payments and protect the role of the US dollar on the world stage.
However, the government has also warned that official digital money should take into account possible changes in the financial world, such as encouraging more runs on financial companies. It should also maintain privacy, protect against crimes like fraud, and be resilient.
The reserve raised the possibility of offline capability to allow transactions when internet access is unavailable, such as during natural disasters.
The agency stressed that its report was a “first step” in discussing the possibility of a central bank cryptocurrency, and that it would give the public until May 20, 2022 to offer comment and respond. to the questions.
For now, however, the Reserve will remain neutral and will only operate on a digital currency if longer-term research supports the concept. It is resisting the pressure to act quickly, even if other countries are already moving forward.
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