The United States Federal Reserve (Fed) published its plans to initiate an investigation process on the risks and benefits of the possible implementation of a Central Bank Digital Currency (CBDC) in the United States. This, due to the current global trend, according to the WSJ. Following this pattern, Hong Kong published the first technical documents to make way for its CBDC.
However, although a study on the implementation of a CBDC has been initiated. The final decision may not be seen in the short term. Unlike decentralized cryptocurrencies like Bitcoin, CBDCs are backed by the country’s Central Bank.
Also, the implementation of a “digital dollar” would perhaps be a faster and cheaper solution for electronic payments. Also, the government may distribute financial aid to people who do not have a bank account or who are unable to receive money in the traditional way.
Fed Chairman Jerome Powell reported that they hope to create a more secure and stable solution, rather than being one of the world’s top issuers. The main concern of the experts is linked to the fundamental role of the dollar as a world currency.
Likewise, Powell and other Fed officials have stated that an early analysis will aim to determine whether the country should consider CBDCs as a solution. The objective of the investigation is to analyze the problem and determine if it has clear and tangible benefits. In addition, take into account the risks and costs that would be associated with the development of this digital currency.
The study of the proposal will begin with the publication of a technical analysis on the subject and the public request of different opinions.
Different countries in the world wish to adopt CBDCs
In Central America, Honduras and Guatemala want to follow the example of their neighbor El Salvador. Which adopted Bitcoin as legal tender. However, instead of adopting a cryptocurrency that already exists, they want to issue their own CBDC digital currencies, issued by their central banks.
Likewise, the Central Bank of Honduras has initiated an investigation to determine the feasibility of a pilot test, issuing its own CBDC. This, according to the statements of the president of the central bank of Honduras, Wilfredo Cerrato, in a forum in Tegucigalpa.
However, central banks are not excited about integrating a new form of currency into their financial system, without prior preparation. The committee in Honduras for the research of the project was formed only six months ago, and it will take a long time to complete the research phase.
Central bank digital currencies have been gaining more prominence and interest in the world every day. Nigeria’s CBDC, eNaira, will be launched on October 1, the 61st day of the country’s independence. The Ukrainian government has also moved forward with its plans for a CBDC, by granting the National Bank of Ukraine authorization to issue digital currencies.
Finally, advocates of CBDCs often highlight two main advantages in implementing a CBDC. First, greater speed and security when paying. Second, the flexibility of CBDCs allows for the efficient implementation of new monetary policies, which include manipulating interest rates directly in the accounts of CBDC holders.