The Federal Reserve is working tirelessly on a central bank digital currency projects with a number of prototypes nearing completion
According to the Federal Reserve Chairman, Jerome Powell, the US Central bank is exploring possibilities to launch a digital dollar.
Powell announced this during an event organised by the Bank for International Settlements (BIS). Two prototypes of the digital dollar are nearing completion which were developed by officials at the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT).
James Cunha is leading the project on behalf of the Boston Federal Reserve Bank and disclosed, with Bloomberg, that the plans of the project are set to be released in July:
“The Boston Fed and MIT hope to unveil some of their work in the third quarter, including at least two prototype software platforms that could move, store and settle transactions made with digital dollars.”
Cunha added that once the prototype is released, others will be able to build on its foundations. However, there are still a number of issues that need to be addressed by the Central Bank, Treasury and Congress for this project.
The issues outlined by Cunha are:
- If the Federal Reserve Bank should host customer accounts
- Whether or not to allow anonymity
- Cyberattack consumer protection / Transaction errors
“We think it’s important that we not wait for the policy debate because then we’ll be a year or so behind. This will take significant outreach to the industry and serious debate.”
Jerome Powell also stated that the central bank will only take on the digital dollar project if it is supported by elected leaders, however, it remains a project with the highest priority.
Government digital currencies
The US follow China in attempting to implement their own digital currency.
China is also set to expand their operations in the digital industry with the launch of its on digital currency called Digital Yuan. The currency is government backed and has different qualities to cash and digital deposits. The pilot programs for Digital Yuan were launched in four cities last year and testing has now moved to China’s major cities – Beijing and Shanghai.
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