The Federal Reserve will ramp up its exploration of a digital dollar later this summer, Federal Reserve Chairman Jerome Powell announced on Thursday.
In order to “help stimulate broad conversation,” the Fed will issue a discussion paper this summer outlining the central bank’s “current thinking” on digital payments and the benefits and tradeoffs of a central bank digital currency, or CBDC, Powell said in a statement.
The Fed has already been exploring the benefits and tradeoffs of a digital currency for the past several years, Powell said.
Last summer, a team at the Boston Fed started to work with researchers at the Massachusetts Institute of Technology to find out what it would take to build a U.S.-backed digital currency.
A Fed-backed digital dollar wouldn’t be a cryptocurrency based on decentralized blockchain, the ledger-based technology that underpins traditional digital currencies like bitcoin
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China has made headlines recently when it rolled out tests of a new digital yuan.
In his message, Powell stressed any potential digital dollar would not be a replacement of cash or current private-sector digital forms of the dollar, such as deposits at commercial banks.
Progressive Democrats view the creation of a “digital dollar,” along with accounts for every American at the central bank, as ways to assist poor Americans who don’t have access to the banking system.