The U.S. Federal Reserve has said making an official digital dollar might give Americans greater and faster payment options at the cost of some potential financial stability risks, Reuters reported.
In a paper released Thursday (Jan. 20), the Fed didn’t make policy recommendations — offering no clear perspective where the bank stands on launching a central bank digital currency (CBDC).
The Fed has said it doesn’t want to make one “without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law,” according to the report.
It has gingerly danced around the subject that has ignited debates among the top officials at the Fed — even when other global central banks have begun exploring CBDCs more robustly.
“While a CBDC could provide a safe, digital payment option for households and businesses as the payments system continues to evolve, and may result in faster payment options between countries, there may also be downsides,” Fed officials wrote.
Among the challenges are the upkeep of financial stability and working to make sure a digital dollar would go well with other means of payments.
Additionally, the bank needs to ensure that the CBDC doesn’t hurt privacy concerns and that the government will be able to fight against illicit finance. Until late May, the Fed will collect public feedback on the issue via an online form.
PYMNTS recently reported that Tom Emmer, a Republican Congressman, has debuted a new bill to stop the Fed from issuing a CBDC to individuals.
Read more: Congressman’s Bill To Ban Fed’s CBDC Will Heat Up Debate
The proposal includes an amendment to the Federal Reserve Act, extending Section 13 in order to make it so the Fed can’t offer products or services to an individual, keeping up an account on an individual’s behalf or issuing a CBDC to an individual.
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