US Fed Releases White Paper on Its Digital Dollar
The 40-page paper represents a key step towards creating a digital dollar, but doesn’t indicate whether the central bank should pursue such projects. Instead, it asks for public feedback on questions of privacy, financial stability and just how a digital dollar might be used.
The Central bank, therefore, has asked for public comment until May 20 to participate in the CBDC research. In fact, the Fed even made it clear that it won’t proceed for a CBDC ‘without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.’
The report further notes that the dollar is currently the most widely used payment method in the world being the global reserve currency. This gives the U.S. the ability to influence "standards for the global monetary system."
"It is important, however, to consider the implications of a potential future state in which many foreign countries and currency unions may have introduced CBDCs. Some have suggested that, if these new CBDCs were more attractive than existing forms of the U.S. dollar, global use of the dollar could decrease and a U.S. CBDC might help preserve the international role of the dollar," the report said.
As per the latest whitepaper, the Federal version of digital currency will differ from the traditional digital payments systems in the country. For instance, the proposed CBDC will flow directly between parties, just like exchanging cash or transferring funds electronically instead of being funneled through traditional banks as seen in digital transactions. However, banks and payment firms could also create accounts or digital wallets.