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Fed Takes Closer Look at Creating Digital Money


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Federal Reserve chair Jerome H. Powell.

Federal Reserve chair Jerome H. Powell said the central bank will issue a discussion paper this summer that outlines the benefits and risks of a U.S. central bank digital currency.

Credit: Al Drago/The New York Times

Top Federal Reserve officials have made clear in recent days that the central bank will spend this year taking a closer look at the possibility of a digital dollar — a push partly motivated by concerns that private-sector digital coins could come to dominate the payment system.

Jerome H. Powell, the Fed chair, announced last week that the Fed will issue a discussion paper this summer outlining the benefits and risks of a U.S. central bank digital currency, which would basically be a digital version of cash. He made clear that the Fed had not decided to issue a digital currency, and that the paper "represents the beginning of what will be a thoughtful and deliberative process."

Mr. Powell specifically cited stablecoins, digital coins that tie their value to the dollar or another underlying asset, as something that could pose risks to users and to the "broader financial system" because those private currencies "may not come with the same protections as traditional means of payment." That means the Fed needs to understand how to oversee them.

From The New York Times
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