An innovation hub will help the U.S. central banking system advance the process of implementing digital currency, Federal Reserve Chair Jerome Powell said, according to a Monday (Nov. 29) press release.
The New York Federal Reserve debuted its innovation hub on Monday (Nov. 29). In addition to supporting the central bank’s plans to issue digital currency, the center will assist the central bank in analyzing the financial risks stemming from climate change, as well as financial market infrastructure and governance.
The Federal Reserve has been mulling the possibility of issuing U.S. digital currency for some time, according to PYMNTS.
As of last month, federal representatives were divided on the issue, potentially delaying the creation of a digital dollar. Should the digital currency move forward, it could be accessed on mobile devices in place of slow and expensive electronic payments.
The Federal Reserve’s board is undertaking a discussion paper to analyze the policy issues related to a central bank digital currency.
Along the lines of a digital dollar, the Federal Reserve may also seek insight on the possible creation of a digital coin, according to PYMNTS.
Digital coins could serve as a direct competitor of stablecoins.
U.S. officials have been calling for more regulation of stablecoins. In September, Wyoming Sen. Cynthia Lummis said stablecoins — which are usually tied to the U.S. dollar and fiat currencies — should be supported by cash and suggested that they be bank-issued.
Treasury officials are undertaking a report on stablecoins with a more in-depth review on whether they pose any economic threat. Should stablecoins be deemed a traditional financial product, more regulation could follow.
Regardless of the outcome of the central bank digital currency, the Federal Reserve has said it will not ban cryptocurrencies, according to PYMNTS.