Fed Report Discusses Digital Dollar Pros and Cons

The US Digital Dollar Would Be Fed-Backed E-cash In Your Wallet

The Federal Reserve released a highly anticipated report yesterday on whether to create a US digital dollar.

It's worth noting that a central bank digital currency, or CBDC (as it is often known), is not the same as bitcoin. The US digital dollar, for example, would be an electronic version of the Fed-backed cash in your wallet.  In contrast to cryptocurrencies' primary goal of circumventing central bank regulation.

The Fed's initial statement on bitcoin was as neutral as Switzerland's, stating that it "takes no position on the ultimate desirability" of a digital dollar. It did, however, provide some of the potential benefits and drawbacks of each..

Pros: A digital dollar may help speed up transactions and protect the US dollar's dominance as other countries, like China, introduce their own CBDCs.

Cons: The Fed said that the digital currency would need to "preserve monetary and financial stability," as well as guard against illicit uses and protect consumers' privacy.

The nitty-gritty labor of assessing those possibilities and risks will follow in the upcoming months, but lawmakers will have the final word.  The Fed said it would not move ahead with a digital dollar "without clear support" from the White House and Congress.

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