Just days after a Federal Reserve executive claimed that the Fed had no plans to issue a CBDC in the near future, the governor of the Fed Board admitted that they are indeed developing tests for a “hypothetical” digital dollar.
What we inspect with the "El Bailador" road simulator: interview, deputy vice president of the Boston Federal Reserve's Secure Payments Group, Robert Bench, announced that the FED had no plans to issue a digital currency CBDC in the near future, although I was working on the basis of technology blockchain as a way to positively promote the mission of the entity's system.
Now, the governor of the Federal Reserve Board, Lael Brainard, said The Fed is currently conducting research and analysis to create a “hypothetical” digital dollar, which will be used for research and study purposes. The Fed has not yet confirmed its plan to issue a digital currency, arguing that such a launch would require a complicated formal policy process involving the government and other stakeholders. Still, Brainard says the Fed is working internally with the Boston Federal Reserve and the Massachusetts Institute of Technology (MIT) to “build and test a hypothetical digital currency” geared toward the Central Bank’s own uses.
It may interest you: The Bank of Spain presents a report with arguments for the debate on a possible CBDC
Active research on blockchain and DLT
The development of a digital currency by central banks is a topic that is gaining increasing interest and importance every day around the world, and the United States, considered the world's leading power due to its economic, technological and military might, could not be left behind. For this reason, the country's Federal Reserve acknowledges that it has been actively developing tests on the technology. blockchain and distributed ledger technology (DLT) over the last few years, with the aim of gaining in-depth knowledge of how both technologies work and applying them to the creation and development of a digital currency.
The “hypothetical” digital dollar that the Fed is talking about will be used within existing payment ecosystems, as well as in the nation’s monetary policy, financial stability, and banking sector, Brainard said. The FED executive also assured that from now on, the lessons, advances, and above all the base code that is developed with the efforts of the technical teams, will be offered as open source software so that anyone interested can implement and experiment with it.
“Lessons from this collaboration will be published and any codebase developed through this effort will be offered as open source software for anyone to use for experimentation.”
Brainard also said that the growing need to access monetary funds quickly and safely is what is driving the possible development of a CBDC by the entity. The executive pointed out that the current crisis completely changed the way finance works, and that now citizens need to have a secure, strong and reliable payment infrastructure that allows them immediate and delay-free access to their funds. With the development of a CBDC, the government could distribute aid and stimulus to citizens in a much more reliable and faster way.
“A software and a currency that can satisfy all needs”
For his part, the senior vice president of the Boston Federal Reserve, James Cunha, pointed out the need to develop a system, software and a digital currency that would meet all the emerging needs of a country like the United States, which has no less than 331 million inhabitants. Based on this, Cunha assured that the challenge is enormous, partly due to the large volume of transactions that would be generated daily, and the requirement for an infrastructure that fully guarantees security in each of the operations.
Although the Fed has not yet decided whether it will undertake the entire legal and political process for the official creation of a digital currency, it does recognize the need to change the nation's economic policy, arguing that the current payment system is slow and burdensome for users, and that it lags behind the payment system of many other nations.
Last November, Fed Chairman, Jerome Powell, said that the entity is carefully analyzing all the benefits that the implementation of a digital dollar can bring.
Continue reading: Positive news for the ecosystem: New York approves cryptocurrencies for trading and custody services
