TL;DR (2-minute read)
- The Federal Reserve has been working on a plan to implement the digital dollar for over a year now
- Other countries like China have already started working on a digital currency
- The Boston Fed and MIT are the main two organizations doing extensive research on this subject
- Pros of digital currency include that they can allow for quick transfer of payments in times where the money is quickly needed, easier access to money, easier to track, fraud protection, and safer.
- The cons of this project include risks of hacking, data leakage, and other security issues. Another con of digital currency is that it will be hard to predict the value of the dollar because it won’t be controlled as much as a physical dollar.
This past Wednesday on September 22nd, Federal Reserve Chairman Jerome Powell released a public statement that the Federal Reserve is planning on starting a study to see whether it should implement its own digital currency. Although other countries are already getting started with other similar projects, Powell stated that the Fed doesn’t feel an urgency to get started with the project, “ I don’t think we’re behind. I think it’s more important to do this right than do it fast.”
The project of implementing a digital dollar has been an idea of the Federal Reserve for more than a year. Key organizations in this project are regional Federal Reserve branches like the Boston Fed and colleges like MIT. Both organizations are working together to determine whether a digital coin would make payment systems more effective. There are many advocates such as Federal Governor Lael Brainard who support the initiative taken. Advocates of the project state that there are many benefits behind the digital dollar. Some of these pros include quick transfer of payments, easy access to money, easy tracking, fraud protection, and being overall safer.
However, while there are many pros to the project, there are still many cons.
The cons of this project include risks of hacking, data leakage, and other security issues. It’d also be hard to predict the value of the dollar because it won’t be controlled as much as a physical dollar.
All these pros and cons all add up together and play a major role in the decision of whether the digital dollar should be implemented or not. The many different pros and cons all add up to the reason why The Federal Reserve is taking so much time on deciding whether the digital dollar should be used or not. However, it makes sense because when dealing with something that can change the entire economic system of a country, all precautions should be taken.