The Federal Reserve is looking at the pros and cons of introducing a digital dollar. This past week, they issued a report that explores the potential benefits and drawbacks of such a move. In addition to their report, they are also asking the public to provide their own feedback on the subject over the next 120 days.
According to the Washington Post, a report put out by the Fed yesterday didn’t reach any conclusions but noted a digital currency would speed up electronic payments while potentially putting stability and fraud protection at risk. They will not move forward with such a move without support from both the executive branch and Congress. Just like most politics, top officials appeared divided on the matter. A member of the central bank’s Board of Governors expressed that some of the pros are it is a competitive imperative for the United States as well as an opportunity to extend benefits to lower-income Americans. Of course, commercial banks are raising alarms that this move could drain their deposits and destabilize financial markets. The central bank has made it clear that a Fed-backed digital currency would not replace physical cash.
A digital dollar from the Fed would be the Fed’s responsibility, taking the risk away from commercial banks like with current digital money. The Fed is seeking public comment on the idea. You’ve got 120 days to chime in.