U.S. Federal Reserve Continues CBDC Research
- Staff members from different branches have been contributing to the bank’s continued CBDC research.
- Although CBDC has been considered even before the pandemic, it is still unknown if the Federal Reserve will ever release such a currency.
The Marriner S. Eccles Federal Reserve Board Building in Washington, D.C., as photographed on September 13, 2012. Tim Evanson/Flickr
The U.S. Federal Reserve has for a while now been collaborating with several regional Federal banks in researching digital currencies, the president of the Cleveland Federal Reserve Bank, Loretta Mester, said this Wednesday.
Mester made the statement during her speech at a virtual event, where she pointed out that several staff members of her bank, including the Cleveland Fed software developers, were contributing to the effort. Although Mester disclosed few details around the research effort, she did reveal that the bank had been considering the CBDC option even before the COVID-19 pandemic struck.
During her speech, Mester spoke about the effects the pandemic had on the country, and how it disrupted the country’s most significant infrastructure, including the payments sector. She also pointed out that the pandemic increased the reliance of businesses and individuals on digital services, and while Federal bank members were conducting research on CBDC, no decision has been taken yet on whether the bank will release such a currency.
Mester said:
“Experimentation like this is an important ingredient in assessing the benefits and costs of a central bank digital currency, but does not signal any decision by the Federal Reserve to adopt such a currency. Issues raised by central bank digital currency related to financial stability, market structure, security, privacy, and monetary policy all need to be better understood.”
Mester also highlighted the effort some regional Federal Reserve branches have put, such as the multi-year partnership between the Boston Fed and the Massachusetts Institute of Technology (MIT), who are experimenting with technologies that can be applied to CBDCs. She also mentioned the Federal Reserve Bank of New York, which has partnered with the Bank for International Settlements (BIS) to research CBDCs.
- The head of China’s central bank digital currency institute said the e-CNY has undergone a major upgrade, and should be made available as an option in all retail scenarios.
- The PBOC official noted that platforms can integrate the CBDC in the short term using QR codes, and focus on upgrading their payment tools in the long run.
Office building of the People’s Bank of China. Flickr
- The current governor of Florida, Ron DeSantis, announced he is joining the race for the 47th president of the U.S. during a Twitter Spaces event on Wednesday.
- During his speech DeSantis declared his support for Bitcoin and the wider crypto space, noting that if Joe Biden is re-elected “they’ll probably end up killing it”.
- Planned for 1 April, the CBDC trial will involve real consumers and real transactions, though they will be limited to a certain number of customers and transfers.
- The pilot, however, will not be opened to the general public in its first phase, and will only be opened to customers chosen by the 13 participating local banks.