The U.S. Federal Reserve will publish a paper on the possibility of creating an official digital currency for the U.S. sometime this summer, President Joe Biden’s administration announced Thursday.
Federal Reserve Chairman Jerome Powell says the central bank has long had its eye on digital currencies, but the U.S. has yet to take major steps toward creating an official one. U.S. rivals like China are well on their way to creating official digital currencies and even cracking down on third party currencies such as bitcoin. Powell did not clarify when the report would be released this summer, according to CNBC. (RELATED: Continued Business Failures Pose ‘Considerable’ Risk To Economy, Federal Reserve Says)
“The effective functioning of our economy requires that people have faith and confidence not only in the dollar, but also in the payment networks, banks and other payment service providers that allow money to flow on a daily basis,” Powell said in a video message accompanying the paper’s announcement.
WASHINGTON, DC – MARCH 03: Federal Reserve Chair Jerome H. Powell announces a half percentage point interest rate cut during a speech on March 3, 2020 in Washington, DC. (Photo by Mark Makela/Getty Images)
“Our focus is on ensuring a safe and efficient payment system that provides broad benefits to American households and businesses while also embracing innovation,” he said. (RELATED: We Get It, Janet Yellen Is A Woman. But What Is She Likely To Do As Treasury Secretary?)
In the past, the central bank has emphasized patience in developing a cryptocurrency. Officials argue that getting such a currency right on the first try is more important than beating other nations to developing one first, according to CNBC. Other experts worry that if a rival like China develops an official cryptocurrency first, it could pose a threat to supplant the U.S. dollar as the global reserve currency, a disaster for the U.S.
“We are committed at the Federal Reserve to hearing a wide range of voices on this important issue before making any decision on whether and how to move forward with a U.S. CBDC, taking account of the broader risks and opportunities it could offer,” Powell said in the Thursday message “The paper represents the beginning of what will be a thoughtful and deliberative process.”