Fed Readies Analysis of Digital Currency
As soon as this week, the Federal Reserve could begin weighing the possible risks and benefits of issuing a U.S. digital currency, according to a Monday (Oct. 4) report from The Wall Street Journal (WSJ).
With federal officials being split on the issue, it could take some time before the ultimate creation of a digital dollar, the report stated.
If digital currency efforts move forward, a digital U.S. dollar could be accessed on peoples’ mobile devices and do away with slow, costly electronic payments, according to PYMNTS.
Read more: Stablecoins Under the Microscope as US Preps Digital Currency Framework
In addition to potentially launching a digital dollar, the Federal Reserve, as part of its blueprint for future money, could seek comment on whether it should establish its own digital coin, according to PYMNTS. If a digital coin moves forward, it will most likely compete with stablecoins — a contentious issue among Fed officials. The Fed is looking into how it can keep cash relevant in a world that is rapidly losing interest in the form.
See more: Stablecoins Need Cash Backing, Audits, US Senator Says
A Federal version of digital currency would be issued and backed by the U.S. central bank, a governmental entity, as is the case with U.S. paper dollar bills and coins, according to WSJ.
Regardless of the outcome of the digital dollar possibility, Federal Reserve Chair Jerome Powell has said the U.S. will not ban cryptocurrencies as counterparts in China have done, according to PYMNTS.
Read more: No Plans to Ban Crypto in US — but Digital Dollar May Eventually Win Out
However, the future of both stablecoins and cryptos could be questionable should U.S. digital coins become reality. During a hearing on Capitol Hill last week, Powell said that stablecoins are “like bank deposits, but they’re to some extent outside the regulatory perimeter and it’s appropriate that they be regulated.” That was a bit of a contrast from his statement over the summer that, in lieu of digital U.S. currency, “you wouldn’t need stablecoins; you wouldn’t need cryptocurrencies.”