Federal Reserve Governor Michelle Bowman opined that central bank is exploring the benefits of CBDCs while speaking at Independent community bankers of America meeting. The widespread adoption and use of digital currencies such as Bitcoin and Ether have emerged from distributed ledger technology. This situation has spurred central banks worldwide to consider issuing CBDCs to the public, and several have already done so.
For some years, the Federal Reserve in the United States has been researching the potential of a CBDC. It worked on a series of publications for the Bank for International Settlements that looked at the underlying ideas and core characteristics of CBDCs, system architecture and interoperability, user demands and uptake, and financial stability implications.
CBDC’s Supposed Benefits
According to the report, a CBDC might provide benefits not found in existing payment systems, such as stable coins. Payments for products and services might be made by users, including individuals, corporations, and governments.
The following are some of the other advantages highlighted in the paper:
- Cross-border payments
CBDCs can enhance the current sluggish and costly cross-border payment system. However, the report warns that achieving this would need extensive international collaboration to secure shared standards and infrastructure and a legal framework to prohibit illegal transactions and agreements on the number of participants, costs, and execution.
- Inclusion in the financial system
A CBDC might lower transaction costs and remove obstacles to financial inclusion, which would benefit low-income families. According to the article, further research is needed to determine how CBDCs can boost financial inclusion.
- Increasing the rate of innovation
A CBDC might help level the playing field for payment system innovations and establish the groundwork for private sector solutions to address current and future payment service demands. The costs of developing a secure and reliable form of personal money are currently prohibitive.
Next Steps And Prospects For A CBDC In The US
The study ends by asking for more feedback from stakeholders on the advantages, hazards, design, and policy implications of a US CBDC. It lists 22 specific questions to which the general public must respond by May 20, 2022.
The post “Trying to Keep an Open Mind”-Federal Reserve Governor Bowman On CBDCs appeared first on CoinGape.
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