The Fed Reserve is taking another step to developing its central bank digital currency, announcing Thursday that it will publish a research paper this summer that will delve deeper into the subject. Fed Reserve Steps Towards Developing Its Central Bank Digital Currency Though the Fed Reserve did not announce any firm proposals for the currency, Chairman Jerome Powell cited the emergence in payment technologies and said that the Federal Reserve has been “carefully monitoring and adapting” to those developments. “The successful operation of our economy necessitates that people have faith and trust not only in the currency, but also in the payment networks, banks, and other payment service providers that enable money to flow daily,” Powell said in a video message accompanying the announcement. Looking For Better Alternatives Powell mentioned the growing popularity of cryptocurrencies such as Bitcoin, but he stated that they are still inefficient payment mechanisms. Other benefits are provided by stablecoins, which are linked to unique currencies. “Technological advancements also provide new opportunities for central banks, like the Fed,” Powell said. “While different systems and technologies may be used, a CBDC may be built for general public use.” The Federal Reserve has been researching payment systems for several years and intends to release a product called FedNow, most likely in 2023, that will address many of the issues surrounding the need for immediacy in transactions as well as the plight of the unbanked. “At the Federal Reserve, we are committed to hearing a wide variety of views on this critical topic before making any decision on whether and how to proceed with a U.S. CBDC, taking into account the wider threats and opportunities it could offer,” Powell said. “The paper marks the start of what will be a lengthy and deliberative process.” The Fed is collaborating on the project with several organizations, including the Bank for International Settlements. The Boston Fed is in charge of the project.
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