Don't expect the US Federal Reserve to issue a digital dollar any time soon. CNBC reports the Reserve has published its long-in-the-making study of a central bank cryptocurrency, but took no stances on whether or not it should pursue the technology. The paper instead explored the potential benefits and pitfalls of digital currencies, and asked for public comments.
The Fed cautioned that existing cryptocurrencies tend to be highly volatile, consume lots of energy and frequently have significant transaction limitations. A central bank-backed format might overcome some of those problems, the Reserve said, by serving as a "bridge" between payment services, making finance more inclusive and providing "safe and trusted" money. The Reserve also believed the digital money could improve cross-border payments and protect the role of the US dollar on the world stage.
However, the government also warned that official digital cash would need to account for possible changes to the financial world, such as encouraging more runs on financial companies. It would also need to maintain privacy, protect against crimes like fraud and be resilient. The Reserve floated the possibility of offline capability to enable transactions when internet access isn't available, such as during natural disasters.
The agency stressed its report was a "first step" in discussing the possibility of a central bank cryptocurrency, and that it would give the public until May 20th, 2022 to offer feedback and answer questions. For now, though, the Reserve will remain neutral and will only work on a digital currency if longer-term research supports the concept. It's resisting the pressure to act quickly, even if other countries are already moving forward.