The Fed Plans to Unveil Digital Dollar Prototypes in July

The Fed Plans to Unveil Digital Dollar Prototypes in July

The Fed Plans to Unveil Digital Dollar Prototypes in July

The Federal Reserve is actively working on a central bank digital currency, with some prototypes nearing completion. The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT) plan to unveil two prototypes of the digital dollar in July.

Digital prototypes soon in dollars

Federal Reserve Chairman Jerome Powell told a Bank for International Settlements (BIS) event on digital innovation by central banks last week that the US central bank is actively exploring the possibility of introducing a digital dollar.

The Federal Reserve is actively working to create a central bank digital currency (CBN). At least two prototypes of the digital dollar are nearing completion, developed by officials at the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT). They plan to publish their research as early as July, said James Cunha, who leads the project for the Boston Fed. He told Bloomberg:

The Boston Fed and the Massachusetts Institute of Technology hope to unveil some of their work in the third quarter, including at least two prototypes of software platforms that could move, store and trade digital dollars.

Once the prototypes are released, other people can see the code and develop it further, Cunha said.

According to Cunha, there are important issues regarding the digital dollar that need to be addressed by the Federal Reserve, the Treasury Department and Congress. These include whether the Fed should host customer accounts itself, whether it should provide anonymity, and what protections consumers have in the event of a cyber attack or erroneous transaction. He added that the Fed’s work is intended to show what is possible without taking a position on these important issues.

We think it’s important not to wait for the political debate, because that would put us a year or two behind, Cunha said. This requires extensive reporting by the industry and serious debate.

Fed Chairman Powell said the central bank would only fully embrace the digital dollar with the support of the country’s elected leaders. He said in February that the digital dollar was a very high priority project for the Fed. We will need the support of Congress, the administration and the public, Powell stressed last week, adding:

We couldn’t do it without the support of Congress, and I think the ideal would be to pass an enabling bill instead of trying to interpret our legislation to make it possible.

Do you think the Fed should issue a digital dollar? Let us know your comments in the section below.

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