HomeCryptoStable CoinThe Fed has tested several DLTs for the digital dollar

The Fed has tested several DLTs for the digital dollar

Over the past few months, the Fed has been testing several distributed ledger technologies (DLT) in order to understand the potential benefits in terms of creating a digital dollar

This was revealed by the president and CEO of the Federal Reserve Bank of Cleveland, Loretta J. Mester, in a speech at the Keynote Session of the 20th Anniversary Chicago Payments Symposium. 

She said: 

“The Federal Reserve has been researching issues raised by central bank digital currency for some time. The Board of Governors has a technology lab that has been building and testing a range of distributed ledger platforms to understand their potential benefits and tradeoffs. Staff members from several Reserve Banks, including Cleveland Fed software developers, are contributing to this effort”.

She added that the Federal Reserve Bank of Boston has been working for years with the Massachusetts Institute of Technology (MIT) in testing various technologies that could be used for a central bank digital currency (CBDC). 

Even the Federal Reserve Bank of New York is engaged in this effort with its own innovation centre, in collaboration with the Bank for International Settlements (BIS), through which it is trying to identify and analyze critical trends in this specific area.

At this point Loretta J. Mester stated: 

“Experimentation like this is an important ingredient in assessing the benefits and costs of a central bank digital currency, but does not signal any decision by the Federal Reserve to adopt such a currency. Issues raised by central bank digital currency related to financial stability, market structure, security, privacy, and monetary policy all need to be better understood”.

The Fed’s commitment to the digital dollar

So on the one hand, there is confirmation that the US central bank’s commitment in this direction is decidedly concrete, with a considerable effort, but on the other, there is also confirmation that the situation is actually still only in the study phase, perhaps also due to a not yet sufficiently deep knowledge of all the consequences that could be generated by the release of an entirely and natively digital dollar.

In her speech, Mester also highlighted the need to ensure that the payment system remains modern, resilient, and able to adapt to changing customer needs, suggesting in fact that some innovation is required

The fact that China seems to be ahead of the curve in this respect may also push the Fed to accelerate the development of the digital dollar, as according to Mester, it seems to be capable of doing so. However, the American central bank seems to be decidedly more prudent than the Chinese one in this respect. 

 

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".
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