According to the Bloomberg report, The United States has finally joined the bandwagon of countries testing a central bank digital currency (CBDC). The report cited Governor Lael Brainard saying that during a virtual technology event yesterday that the US Federal Reserve, in collaboration with research teams from Boston Fed and Massachusetts Institute of Technology (MIT), is conducting experiments with a hypothetical digital currency. Many Founder Junior associates working with digital currencies in other countries have stated the importance of CBDC earlier, and the USA is finally joining the list of countries that are exploring digital currencies.
Central bank to explore blockchain technology
Governor Lael Brainard mentioned that both institutions have been researching blockchain technology for several years to see how the central bank can utilize it for a digital dollar alongside the effect it might have on the existing financial system. The governor further said that they are taking the time and effort to understand the significant implications of digital currencies and central-bank-digital-currencies worldwide. The dollar’s significance as a global reserve currency means the Fed has a vital role in the research and development of digital currencies, according to Brainard.
The Federal Reserve “hasn’t yet committed” to issuing a CBDC.
Although the Fed is taking the next step to build and test a DLT-based currency, Governor Brainard noted that the central bank “hasn’t yet committed” to issuing a CBDC should the experiment become successful. It is strictly for research purposes, the governor said. According to the report, a formal policy process would be required before the federal reserve can issue or use the currency. The formal policy would require the government and other stakeholders with many legal questions to be answered. The governor noted that the Fed had not started the process nor decided to start it. China is set to become the first major nation to launch its CBDC.