13 Aug FRB – An Update on Central Bank Digital Currencies (CBDC) Risks
August 13, 2020 –
It is a testament to widespread investments in technology, gets credit for the ability to maintain operations seamlessly despite unprecedented shock associated with the COVID-19 crisis. COVID is a reminder of the importance of resilient and trusted payment infrastructure. Digital currencies, including those of central bank’s (CBDCs), present opportunities, but also present risks associated with privacy, illicit activity, and financial stability. China has moved ahead rapidly on its version of a CBDC; however, the FRB is active in conducting research, experimentation related to distributed ledger technologies and digital currencies. Significant policy process and legal considerations before the issuance of a CBDC. The FRB is taking time and effort to understand the significant implications of digital currencies and CBDCs around the globe.
The FRB stated that it is engaged in ongoing research and experimentation with the latest payment technologies. FRB’s Technology Lab (TechLab) is conducting hands-on research to further understanding of payment technologies and support the development of policy views. FRB (Boston) is collaborating with researchers at the MIT on a multiyear initiative to build a hypothetical digital currency oriented for central bank utilization. This project supports the FRB’s broader efforts to assess CBDC system safety and efficiency.
NACHA on Research
On Aug. 19, 2020, NACHA reported on central bank systems virtual currency research. FRB released a press report highlighting research and experimentation the central bank system has been conducting to understand digital currencies and use by central banks.
For more information, visit www.federalreserve.gov