The US Federal Reserve, which is working on creating a central bank digital currency (CBDC), is nearing completion. The Federal Reserve Bank of Boston, in collaboration with MIT (Massachusetts Institute of Technology), plans to present two prototypes of the Digital Dollar by next July.
Federal Reserve Chairman Jerome Powell, speaking at a Bank for International Settlements (BIS) event last week focusing on digital innovation at the central bank, said the US Federal Reserve is working on circulation of a digital dollar.
James Cunha, who leads a team of Federal Reserve Bank of Boston and MIT officials working to create the digital currency said:
“Boston Fed and MIT hope to present some of their work in the third quarter, including at least two prototype software that will manage digital dollar transactions.”
As Cunha explained, after the presentation of the prototypes, others will be able to deal with the further development of the code.
Cunha then outlined the major challenges facing the central bank, the Treasury and Congress in relation to the digital dollar. These include the fact that the Fed will have to host customer accounts, whether anonymity will be allowed, and what safeguards will be offered to users to protect them from cyberattacks or fraudulent transactions. He added, however, that the Fed’s work aims to show the potential without taking a position on these important issues.
“We think it is important not to wait for the policy debate to be implemented, because then we will go back a year,” Cunha said.
He also stressed that the Central Bank will fully adopt the Digital Dollar only after strong support from the elected leaders of the nation.
“We will not continue this without the support of Congress, and I think it should be provided in the form of legal authorisation, rather than a review of the interpretation of existing laws.”