The Federal Reserve in a new paper reeled out a list of preconditions that would lead to the U.S central bank launching a digitized version of the American Dollar. The paper was written by Jess Cheng, Angela Lawson, and Paul Wong.
According to the paper, before the apex bank would authorize a central bank digital currency (CBDC) project, there has to be “clear policy objectives, broad stakeholder support, strong legal framework, robust technology, and market readiness” as “high-level environmental preconditions that support a general-purpose CBDC in the United States.”
Noting that the implementation of a CBDC project would require “many systems, tools, processes, and structures to be in place.” They pointed out that the Federal Reserves under chairman Jerome Powell was already opening a public line of inquiry that would engage with the public on the subject of a national digital currency.
It was noted that the paper was the first in a long line of actions needed to open the discussion on the project and also how to “engage with a broad array of stakeholders and monitoring market readiness could inform clear policy objectives and vice versa.”
U.S CBDC Project Would Require Private Cooperation
A digitized US Dollar is going to have a widespread impact on the economy and it would essentially require a broad range of public and private-sector participants. They noted that the success of the project would depend greatly on if these stakeholders become swayed to actively participate in the implementation and use of the virtual asset.
The authors of the paper also touched on the subject of if the Federal Reserves would need an alteration to its legal framework to allow for the development of such projects. “Consideration would need to be given as to whether additional amendments to the [Federal Reserve Act] would be required related to the issuance of a general-purpose CBDC,” they noted.
Conclusively, the authors agree that a whole lot of work and efforts would have to be put in place to help launch this national digital currency.
