The Senate Banking, Housing and Urban Affairs Committee will hold a re-nomination hearing for the Federal Reserve Board Chairman on January 11, 2022, in Washington, DC.
The Federal Reserve released its long-awaited study of a digital dollar on Thursday, exploring the pros and cons of the much-debated issue.
The 40-page paper shies away from any conclusions about a central bank digital currency. The report was supposed to be out in the summer of 2021.
At a time when financial transactions around the world already are highly digitized, it provides an extensive look at benefits such as speeding up the electronic payments system. Financial stability risks and privacy protection are some of the downside issues discussed in the report.
The structure of the U.S. financial system could be changed by a central bank.
Fed Chairman Powell has been non-committal in his comments. Fed Governor Lael Brainard has been nominated to be vice chair of the Federal Open Market Committee.
The benefits of the digital dollar are not obvious according to several other Fed officials.
Current digital money is a liability of commercial banks, whereas the Fed would be a liability. It would mean that the Fed wouldn't pay interest on money stored with it, because some people prefer to keep their money with the central bank.
The paper is asking for public feedback on 22 items. There will be a 120-day comment period. The report is the first step in an extensive process, but there is no timetable on when it will be finished.
Powell said that they look forward to engaging with the public, elected representatives, and a broad range of stakeholders as they examine the positives and negatives of a central bank digital currency in the United States.
The paper states that the Fed believes that a U.S.CBDC would best serve the needs of the United States by being privacy-protected, intermediated, and identity-verified.
The report states that it is not intended to advance a specific policy outcome and takes no position on the ultimate desirability of the digital dollar.
Some of the benefits are the speed of a Fed-controlled system in the case of a need such as the beginning of the Covid epidemic to getStimulus payments to people quickly. Financial services to the unbanked are seen as an asset.
The Fed is working on a service called Fed Now that is expected to come online in 2023.
The digital dollar advocates worry that the Fed's delay in implementing a central bank currency will put it behind global competitors, specifically China, which already has moved forward with its own product. There have been suggestions that the U.S. dollar could be in danger of being overtaken by China as the world's reserve currency.
Powell and other Fed officials stress the need to get the project right despite the fast pace.
The report states that the introduction of aCBDC would be a highly significant innovation in American money. Broad consultation with the general public and key stakeholders is needed. The paper is the beginning of the conversation.
The Fed stated that it will not proceed without a clear mandate from Congress.
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