What’s going on with the US digital dollar? Last March 2021, the Feds intended to share a report on the proposed prototype version of the digital USD. Instead, six months later, on January 20, 2022, the Federal Reserve finally released their 40-page report enumerating and describing their project, discussing and exploring several issues related to the introduction of Central Bank Digital Currency (CBDC) in the USA.
Key Points You Should Know from the Report
The document is long, so let’s break it down to a few key things you might want to know.
- The proposed digital monetary system is a hybrid – The Federal Reserve describes the creation and implementation of the digital US dollar, as well as CBDC in general, to be managed and to perform with the characteristics of both cryptocurrency efficiency and the stability of currency based on a central banking system.
- The Feds are seeking public opinion – Before the Feds attempt to roll out US digital currency, they hope to check the population’s enthusiasm and questions about having their own CBDC. They designated 120 days since they published to collect public comments and questions regarding the data in the report. It was not clear what they would do with the information or how long it may take to act on the survey response, or even if they would at any point.
- “Fundamental change” – One of the statements made in the report, moving to a digital system would “fundamentally change” our country’s national financial structure. One example of this would be to reduce the number of national deposits into regular banks, thus leaving less cash available for loans, which is the main way banking institutions make money.
- No recommendations – Though the report mentions and describes in some detail many of the working aspects and future projections and possible scenarios regarding the eventual rollout of the CBDC, the Federal Reserve made no specific statements about a preference, a future plan in the future or recommendations.
Experts in the current financial industry believe the eventual US adoption of a CBDC being widely used or accepted is probably years away. On the other hand, China has the only noteworthy economy currently trialing its own CBDC, many say, due to their fear of cryptocurrency systems. To them, international use of cryptocurrency is already threatening to devalue the yuen, even as they work to undermine the value of the US fiat dollar. Currently, the US is part of the 86% of the world’s central banks who are still exploring these issues. At Aponte Crypto Consultants, we keep our finger on the pulse of CBDC development. Like it or not, the government-issued digital currency may well become bigger news down the road. Do you have questions regarding how central bank digital currency might affect your crypto portfolio or future trades and investments? Contact our professionals today.