The United States’ Federal Reserve, in collaboration with the Massachusetts Institute of Technology (MIT), has initiated research on the development of a ‘digital dollar’ amid growing interest among central banks across the world in issuing official digital currencies.
It was revealed by the Chairman of Federal Reserve, the central bank of the US, Jerome Powell, while addressing the International Monetary Fund’s (IMF) annual debate on the central bank digital currency (CBDC) program.
Since the US dollar is a global reserve currency, used by companies and central banks worldwide, the US will have to work tremendously hard to ensure it addresses the risks of cyber-attack, fraud, and counterfeiting before issuing the digital dollar, warned Powell.
These are some of the issues where it’s more important for the United States to get it right than it is to be first. And getting it right means that we not only look at the potential benefits of a CBDC, but also the potential risks.
According to different reports, the announcement of the development of Libra by the American social media company, Facebook, has prompted the US Federal Reserve to commence research on the digital dollar.
For the unversed, Libra is a centralized blockchain-based payment system proposed by Facebook. In contrast to cryptocurrencies such as bitcoin, Libra will be managed and entrusted cryptographically by Libra Association, a membership organization consisting of companies from different sectors including payment, technology, telecommunication, online marketplace and venture capital, and nonprofits.