The Federal Reserve System of the USA published a research paper on the digital USD, discovering the currency’s advantages and shortcomings. The establishment said that this is the first step between the system and stakeholders.
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Originally, the release was expected to be published in the summer of 2021. The paper defines a CBDC as a digital liability of a Central Bank that is widely available to the general public.
According to it, one of the benefits of a CBDC is that it accelerates the e-payments system. As for disadvantages, the paper mentions financial stability, and payment system integrity risks. The report noted that a CBDC may transform the form of the U.S. financial system entirely, changing the functions of the private sector and the CB.
The Fed says that the launch of a national digital money would be an essential innovation. However, the authority will move forward with the working process if research finds out that a CBDC is preferable to other means. Also, the Fed would take steps after getting support from the Senate, and the general public.
Lately, the Senate Banking Committee held a hearing with the Fed chair Jerome Powell. During the hearing, Powell said that stablecoins can co-exist with the US CBDC. Also, the US policymakers work on crypto regulations, and consider the risks that the market can present for the economy.