Sept 22 Reuters - The Federal Reserve will release research soon examining the costs and benefits of a federal reserve digital currency, or CBDC, said Fed Chair Jerome Powell on Wednesday.
We're working proactively to evaluate whether to issue a CBDC and, if so, in what form, Powell said at a news conference following the conclusion of the U.S. central bank's latest two-day policy meeting.
The ultimate test that will apply when assessing a CBDC, he told reporters, is if there are clear and tangible benefits that outweigh any costs and risks. The Fed chief said the discussion paper was published in May and will address some public policy issues that could be addressed with a CBDC.
The central bank is also doing other research on the topic, including a multi-year research project that the Boston Fed is undertaking with the Massachusetts Institute of Technology to explore the technology that could be used for a CBDC. Powell announced that it will also seek input from the public and elected officials on the issue.
A digital currency issued by the central bank would be different from cryptocurrencies, such as Bitcoin, which are decentralized and can fluctuate greatly in value. While the exact structure hasn't been determined, a CBDC could give the person or business that holds it a physical claim on the Central Bank, the same as direct cash.
Fed officials appear divided on the need for a CBDC. While some, including Fed Governor Randal Quarles, say that the United States should be a leader in the area at a time when other large economies such as China are moving more aggressively, Fed Vice Chair for Supervision Lael Brainard and others are more skeptical that the benefits will outweigh the costs.
On Wednesday, Powell said: «Top line, we haven't made a decision.»