Market

The Fed assesses the pros and cons of issuing CBDC

It remains unclear whether CBDCs will benefit the US economy, the Federal Reserve (Fed) said.

The United States Federal Reserve has released a discussion document examining the pros and cons of issuing a potential US CBDC. This was the Fed’s first public discussion to determine how a digital version of the dollar could benefit the domestic financial system.

Advantages and disadvantages

While many countries, most notably China, are racing to issue digital central bank states and deploy them in their own currency networks, the United States is in no rush. More than a year ago, Fed Chair Jerome Powell pledged that the world’s leading economy would “carefully and thoughtfully review the matter” before deciding whether to issue a CBDC.

In one report The Fed recently outlined the key pros and cons of such a financial product.

“We look forward to engaging with the public, elected officials, and a variety of stakeholders as we explore the pros and cons of a CBDC in the United States.”

The agency noted that consumers and businesses have long held and transferred money in digital forms, including bank accounts or online transactions. Thus, a potential central bank digital currency could continue the trend and offer “a secure, digital payment option for households and businesses.” Additionally, CBDC transactions may offer the opportunity for faster payment processing between countries.

However, the digital version of the US dollar may violate people’s privacy as the government will control the currency product. It may also not be conducive to US financial stability and does not encourage existing means of payment.

Last year, Powell argued that the main benefit of CBDCs could be replacing cryptocurrencies, including stablecoins. However, earlier this month he changed his mind, stating that central bank digital currencies and stablecoins can coexist.

In April 2021, the Federal Reserve Chairman ruled that the US should not copy and paste China’s central bank digital currency model. According to him, the two economic superpowers are very different and require separate approaches:

“The currency used in China is not the currency that will work in the United States. It really allows the government to see every payment they use in real time.”

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.

Recent Posts

Bitcoin Spot ETF Outflows Reach Second Highest in History

Bitcoin Spot ETF Outflows hit $541M on November 4, the second-highest single-day outflow in history.…

1 hour ago

PropiChain’s Token Presale Turns Heads as the First DeFi Platform to Merge NFTs with AI 

The hype around PropiChain’s token presale is due to its innovative integration of NFTs and…

4 hours ago

UK Pension Fund Cartwright Encourages 3% Allocation to Bitcoin Investment

UK pension fund Cartwright advised the country's first defined benefit pension fund to allocate 3%…

6 hours ago

Crypto PAC Fairshake Continues to Boost 2026 Election With Support from a16z

a16z and Coinbase have pledged substantial funds to crypto PAC Fairshake, aiming to support crypto-friendly…

7 hours ago

Bitcoin, Ethereum, And Solana Lead Crypto Market, But Not For Long With New AI Altcoin With 30,000% Potential, Expert Says

Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) dominate the crypto market, but experts warn that…

10 hours ago

Dogecoin Price Prediction: Will DOGE Ever Hit $0.7 Again? Why ETFSwap (ETFS) Is The Best Alternative For 100x Gains

Discover the future as the Dogecoin price aims for a $0.7 comeback and discover why…

13 hours ago

This website uses cookies.