When will we have a US digital currency? What drawbacks does the Fed anticipate? https://youtu.be/xT9FvEradK8

1. By:
www.ProfitableInvestingTips.com

2. The US Federal Reserve has been considering
having a central bank digital currency, CBDC,
and has just released a position paper on
the subject. They note that an electronic form
of central bank money would promote
financial inclusion, make domestic and
international payments faster and provide a
platform for innovative financial services and
products. When will we have a US digital
currency? What drawbacks does the Fed
anticipate?

3. US Digital Currency Benefits Versus
Concerns

4. The Fed position paper regarding a central
bank digital currency notes that such a tool
would be “analogous to a digital form of
paper money.” It would be available to the
general public as a “convenient electronic
form of central bank money.” It should
have sufficient liquidity and a strong level
of security.

5. And, they raise concerns about how a US
digital currency would affect the structure of
financial markets, availability and cost of
credit, how safe and stable the financial
system will be, and how it would help or
hinder the effectiveness of US monetary
policy. And, the Fed notes that such a
financial vehicle will need to verify identities in
order to combat money laundering and use of
the system for purposes of terrorism.

7. When and Not If There Will Be a US
Digital Currency

8. In December of 2021 House Financial
Services Committee held a large
educational session regarding digital
assets. A repeated concern was how to
maintain the global dominance of the US
dollar in the face of rising use of
cryptocurrencies and digital currencies of
other central banks.

9. It would appear that much of the delay in
implementing a US digital currency has to do
with the large number of regulatory agencies
that could be involved in such a project and
getting them to agree on a single approach
and set of rules. There has been talk of
setting up a single regulatory agency for this
purpose. The President’s Working Group on
Financial Markets issued a report on the
subject in which it recommended OCC and
FDIC collaboration.

11. Who Is Working On a Digital Dollar?

12. The Boston Federal Reserve has been
working with MIT in an effort to develop a
workable technical standard for a US
digital currency. Likewise the New York
Fed is working with the Bank of
International Settlements Innovation Hub,
the Federal Reserve System, and private
sector experts to design a workable
approach to a US digital dollar.

13. As the old saying goes, the devil is in the
details and in order to get a system that
serves its desired purpose and does not
get hacked by Russians, Iranians, North
Koreans, or whoever a lot of work needs to
be done so that when we have a US digital
currency it is useful and safe.

15. Effect of a US Digital Dollar on
Cryptocurrencies

16. A US digital dollar will be used for online
transactions like cryptocurrencies but not
require a third party. And, the US dollar will
not be subject to wild swings in price like in
the world of bitcoin and others. It will not
be useful for money laundering or
financing terrorism either.

17. It is our opinion that when there is a
functioning US digital currency that it will
not be a knife to the heart of bitcoin and
other cryptocurrencies. That is because,
despite bitcoin being invented to make
financial transactions online easier, its use
today is for financial speculation for the
majority of people and avoiding taxes and
hiding money for nefarious purposes for
others.

18. For more insights and useful information
about investments and investing, visit
www.ProfitableInvestingTips.com.