Home Federal Reserve report kickstarts debate on a digital dollar
Federal Reserve report kickstarts debate on a digital dollar

Federal Reserve report kickstarts debate on a digital dollar

  • Published: 21st January 2022, 15:19

The United States could be gearing towards the launch of a Central Bank Digital Currency (CBDC) if Congress and the Executive are supportive.

US CBDC

On Thursday, the Federal Reserce released a much-awaited report on the viability of a CBDC or a digital dollar. The report identified the pros and cons of the currency. 

In its assessment, the Fed noted a number of benefits for a digital currency. For example, it will provide a “safe, digital payment option” for most Americans. At the same time, it will be an ideal part of the cross-border payments sector. With the currency, it will be easy and cheap for people to send money around the world.

On the other hand, the Fed noted that the CBDC will have some negative impacts. For example, the Fed noted that it could have uncertain effects on the finacial sector. Also, it could impact the cost and availability of credit and stability in the sector.

Other central banks moving forward

The report by the Fed came at a time when other central banks are thinking about launching their CBDCs. 

The most advanced one is the Peoples Bank of China (PBOC), which launched a test of its CBDC in 2021. In that year alone, the currency moved over $9.5 billion in transactions. Over 140 million people opened their CBDC wallet during the year. 

Other central banks building their CBDCs are Sweden’s Riksbank, British Bank of England, and Eurozone’s European Central Bank.
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Crispus Nyaga

Crispus Nyaga is a full-time financial analyst and trader with more than 7 years in the industry. He has been fortunate to work for several fintech companies, mostly from Europe, Asia, and North America. His work is published in leading platforms like Seeking Alpha, Invezz, InvestingCube, Capital.com, and Marketwatch. Crispus operates from a private office in Nairobi.