The United States Federal Reserve (Fed) might soon release its plans to initiate a review of the risks and benefits of issuing a central bank digital currency (CBDC). While the Fed has shown patience in its handling of the digital dollar development, many enthusiasts have waited with bated breath for the process to speed up.
According to a report[1] by Wall Street Journal (WSJ), the review might be launched as early as this week. It would examine how the digital currency will affect the country’s economy. This comes amidst many countries around the world revealing new developments around CBDCs recently.
The WSJ report further stated that the review can’t ensure implementation, as Fed officials remain disputed on the merits of the technology. While easier cross-border payments and inclusion of un-banked persons are touted as merits of a CBDC, another important aspect that requires consideration is how it affects America’s geo-political position.
Last week, Fed. Gov. Lael Brainard, who has long been a CBDC enthusiast, had mentioned this in remarks before the National Association for Business Economics,
“It’s just very hard for me to imagine that the U.S., given the status of the dollar as a dominant currency in international payments, wouldn’t come to the table in that circumstance with a similar kind of an offering.”
However, Fed Chair Jerome Powell remained more reserved in his approach, as he recently commented[2] saying it’s “more important to do it right than do it fast,”. This was partly because of the dollar’s critical global role. He had also stated in a recent press conference that they would only consider issuing a CBDC if they believed there were “clear and tangible benefits that outweigh any costs and risks.”
Several banking institutions and individuals have raised their own concerns
