Sunday, May 26, 2024

US Federal Reserve looking at CBDC to improve existing systems

The US Federal Reserve believes it’s the right time to have a central bank digital currency (CBDC) as technological advancements have come far enough to boost the existing systems. The United States is now officially considering its very own CBDC.

The Federal Reserve has been exploring the benefits and risks associated with it for quite some time now. It has been looking at a variety of angles through experimentation and technological research. Moreover, the US’s central banking system is asking for public commentary on the same. The Federal Reserve explained that it wants to use technological advances like digital wallets, mobile payment apps and cryptocurrencies as well as stablecoins to improve the already safe and efficient America’s domestic payments system.

It highlighted that five points that will guide the consideration of a CBDC:

i. The benefits for households, businesses, and the overall economy

ii. Yield benefits more effective than alternative methods

iii. Consumer privacy

iv. Complementing currency forms of money and financial services

v. Protection against criminal activity

The central bank is committed to ensuring the continued safety and availability of cash. It is considering the CBDC as a means to expand safe payment options, and not to reduce or replace them. A CBDC, as per the Federal Reserve, could provide households and businesses a convenient, electronic form of central bank money with the safety and liquidity that would entail. It could give entrepreneurs a platform to create new financial products and services. A CBDC could support faster and cheaper payments, especially cross-border payments.

The Federal Reserve highlighted that financial institutions in the US are subject to robust rules that are designed to tackle money laundering and the financing of terrorism. As such, a CBDC has to be designed to comply with the same. It said that a CBDC intermediary would need to verify the identity of the person accessing it, in the same manner as banks and other financial institutions currently verify the identities of their customers.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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