The president of the Federal Reserve Bank of Cleveland has revealed details on research into the digital dollar. The president, Loretta Mester, said that the board of governors has been carrying out trials to know their potential benefits and tradeoffs.
Speaking in a keynote address on the 23rd of September, Mester said the Federal Reserve has been working on the central bank digital currency (CBDC) before the pandemic.
In addition, the president said that staff members from several Reserve Banks are contributing to the efforts made on the digital currency. This includes a multi-year partnership with the Massachusetts Institutes of Technology (MIT) and the Federal Reserve Bank of Boston.
Despite the intensive research, President Mester revealed that it does not “signal” the currency’s adoption. As highlighted by Mester, issues raised by the CBDC are financial stability, market structure, security, privacy, and monetary policy.
Noting that the coronavirus pandemic has disrupted many plans, Mester also mentioned the effect of the health crisis on the payment sector.
“The spread of COVID-19 heightened the reliance of business and individuals on digital services and faster connectivity, as many employees began to work from home, and consumers turned to online shopping.”
Importantly, the president said there is a need to make necessary investments in the US payment systems to remain “resilient in the face of extreme stress events.”
Image Credits: Pixabay
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