US Fed Considers Creating Digital Dollar

US Federal Reserve Chairman Jerome Powell has hinted that the agency is exploring the ideadigital dollar. In the future, this initiative will allow the country's central bank to take control of digital assets.

According to the head of the Federal Reserve, during 2021, representatives of the public and lawmakers will have to start discussing this topic.

During a hearing before the Committee on FinancialPowell acknowledged on February 24, 2021 that the digital dollar project raises many questions, which will give lawmakers the opportunity to discuss the concept with the public to find common ground.

«This year we will be activeinteract with the public, including some public events that we are currently working on. For now, we are dealing with technical issues, as well as collaborating and sharing the results of our work with the central banks of other countries, which are also working on similar projects.

Powell said the Fed is moving forward with a decisiontechnical problems associated with the digital dollar. He added that the agency is also in talks with other central banks exploring or issuing Central Bank Digital Currencies (CBDCs).

When asked why the FederalThe backup system needs to consult with legislators to launch the digital dollar, Powell explained that the well-being of other markets is important to the US government, especially when it comes to digital dollar creation.

«We may well need legislative permission to do this. This will become clear when we see in which direction we are going.

It should be recalled that last year, whenPowell reached out to his fellow panellists during the launch of the International Monetary Fund (IMF) cross-border payments program, explaining that the digital dollar would improve the country's payment system by modernizing its payment infrastructure.

Powell also mentioned that the digital dollarwill help bridge the gap between those who have access to financial services and those who do not, as e-currency reaches consumers who are not covered by financial institutions. When asked why the Federal Reserve has still not decided whether or not to use the digital dollar, Powell replied:

«We have a lot of work to do, as well as extensive public consultation with all stakeholders, before making such a decision.»

While many central banks around the world have already adopted digital currency policies, Powell argues that the Federal Reserve is not aiming to do so first.

«I believe that it is more important for the United States to do everythingright, rather than being first. Right means that we must examine not only the potential benefits of CBDC, but also the potential risks, and recognize the important trade-offs that need to be carefully assessed.

For the US Federal Reserve and other central banks, the main goal of launching the digital dollar is to limit the risks associated with non-cash payments.

If the digital dollar is institutionalized,The Federal Reserve will strengthen its credibility and presence in the digital payments environment, which is expected to reduce the risk of individuals becoming completely dependent on private payment systems.

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