The US Federal Reserve released its long anticipated report on the potential for a digital dollar last week. Those hoping the world’s most powerful central bank would revolutionize the way we exchange money were disappointed.
For starters, the Fed made clear that for now it is neither for or against launching a digital currency. And if it does decide to issue one, it wants banks to act as intermediaries, not unlike in the system that currently underpins most electronic transactions.
Dozens of central banks around the world have either launched or are exploring the idea of central bank digital currencies, or CBDCs, according to the Atlantic Council’s CBDC tracker. Proponents say this kind of digital money would be cheaper and faster than traditional payment systems, and more efficient for cross-border transactions.
But in several speeches, chair Jerome Powell has made it clear the Fed is operating from a place of confidence in the dollar’s status as the world’s reserve currency. In other words, it doesn’t want to create a CBDC for the sake of creating a CBDC.