The Federal Reserve is continuing its efforts on the project to issue a digital dollar.
This has been confirmed by the member of the Board of Governors of the American central bank itself, Lael Brainard, who during a speech at the Innovation Office Hours of the Federal Reserve Bank of San Francisco said:
“Given the dollar’s important role, it is essential that the Federal Reserve remain on the frontier of research and policy development regarding CBDCs. As part of this research, central banks are exploring the potential of innovative technologies to offer a digital equivalent of cash…We are continuing to assess the opportunities and challenges of, as well as the use cases for, a CBDC, as a complement to cash and other payments options”.
Brainard spoke about the Fed’s ongoing research to evaluate the potential issuance of the digital dollar, describing some experiments being conducted at the Board Technology Lab. It is here that a multidisciplinary team from the Fed in Cleveland, Dallas and New York is studying the implications of digital currencies on the payment ecosystem, monetary policy, financial stability, banking, the financial system, and consumer protection, along with the Board’s own team.
MIT is working on the digital dollar project
In particular, the Fed in Boston, Massachusetts, is collaborating with researchers at the MIT (Massachusetts Institute of Technology) to develop and test a prototype of a Central Bank Digital Currency (CBDC), of which codebase notes will be published as open-source software.
The same assistant vice president of the Boston Fed’s Secure Payments group, Robert Bench, recently stated that he believes the creation of a tokenized digital US dollar is vital to compete with the same ongoing initiative of the Chinese central bank and maintain the status of global reserve currency.
The digital dollar project therefore seems to be well underway, although still only under study.
Brainard also confirmed that the Chinese initiative forces the Fed to consider the study of the issue of a possible digital dollar.
He further added that the objectives of this study are to understand the security and efficiency of digital currency systems and to provide practical experience to understand how technologies already available today work.
These words might suggest that the current study is not only theoretical, but perhaps even practical, with technical experiments in place to assess not only the feasibility of the project but also the technological implications.
He also confirmed that the United States is participating in a coalition of central banks regarding CBDCs, in order to conduct experiments together, to understand the threats related to cybersecurity, counterfeiting, fraud and anti-money laundering.