US Federal Reserve eyes CBDC to 'improve existing payment systems'

The Federal Reserve of the United States has stated that it is considering a central bank digital currency (CBDC).

According to the bank, it was the appropriate time to establish a CBDC because technology improvements had advanced far enough to allow it to improve on existing systems.

The Federal Reserve of the United States has finally announced that it is considering a central bank digital currency (CBDC).

The central bank has previously discussed CBDCs and conducted preliminary research, but this is the most important declaration to date.

The authority says it hasn't decided whether to pursue or implement a CBDC, but it has been looking into the benefits and hazards "from a variety of aspects, including through technology study and experimentation." It also continues to seek public input on the issue.

The Federal Reserve also published a series of CBDC FAQs, explaining why it was being considered now.

The explanation is that it aims to "improve on an existing safe and efficient U.S. domestic payments system" by using technology improvements such as digital wallets, mobile payments apps, cryptocurrencies, and stablecoins.

The benefits for households, businesses, and the economy in general; yield benefits more effective than alternative ways; consumer privacy; complementing currency forms of money and financial services; and security against illegal activity are all factors that the Fed will consider when considering a CBDC.

It also refers to a report on its USD CBDC that was published in January 2022. The benefits, hazards, and obstacles of implementing a digital dollar were examined in the report.