Fed and MIT to unveil digital dollar prototype by July

Employees at the Boston Federal Reserve Bank and MIT will complete work on a prototype national digital currency (CBDC) by July. Bloomberg writes about it .

The Federal Reserve System (FRS) began exploring this possibility in February 2020 .

The development of the digital dollar became known in August 2020. 

Then the initiators of the project announced their intention to create a “mechanism and software that will meet the needs” of the CBDC for a country the size of the United States. It also had to solve related problems – from a huge number of transactions to ensuring security and privacy.

Boston Federal Reserve Bank spokesman James Cunya said that his team will present two platforms capable of moving, storing and settling settlements involving the digital dollar. He did not clarify whether the blockchain is being used.

The official stressed that the research is aimed at creating a pilot model and does not imply the definition of one or another design of the CBDC.

“We consider it important not to wait for political debate, as this could delay the experiments for a year or more ,” said Cunya.

On the eve of the head of the Fed, Jerome Powell, explained the work on the creation of the digital dollar “by the need to be at the forefront of understanding technological problems”, as well as determining the costs and benefits of its release. He stressed that the central bank will not rush and act without the support of Congress.

Powell said earlier that it is important for the Fed not to be the first to issue a digital currency, but to do it with the right approach .

We will remind, in February, the head of the US Treasury Janet Yellen also mentioned the need to consider the possibility of launching CBDC.

Analysts at the investment bank Goldman Sachs noted that the national digital currency will increase the efficiency of fiscal and monetary policy .

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