Federal Reserve Announces Free Form of Central Bank Digital Currency! American money can control this ability, and privacy security has become a hidden concern.

The US Federal Reserve (Fed) succeeded in its decision to declare the Bank of Digital Currency (CBDC) with the announcement of the free form CBDC "Money and Payment: US Dollar in Era of Digital Transformation" on the 20th (local time). hours. The first stage of public consultation between the Fed and its stakeholders on CBDCs, this 40-page document discusses the benefits and risks of CBDCs and outlines specific decisions, including 22 other decisions. The public can comment on the contents of the free form and submit the form within 120 days.

According to CNBC, the Fed could not clearly decide in its announcement to withdraw from the CBDC. The creation of the CBDC would not have happened without the support of authorities and representatives (such as in the form of certain legislations), citing the low cost of digital money which is being announced all the time soon.

Complete without replacing existing digital payments

The Fed noted in its statement: The introduction of CBDCs will be a major update to the US currency. The CBDC could change the structure of the US financial system, changing the roles and responsibilities of the private sector and central banks.

The Fed has said that the current financial system could be further supported by the CBDC system, but the current gains should only work on private banks (or systems) and will not be released directly. CBDCs are for consumer spending, which means that the Fed does not want consumers to open private accounts with the central bank to access these CBDCs, only that they rely on private companies (loans existing or non-bank) to provide the funds. There are banks and similar financial institutions fulfilling their current responsibilities.

Advantages and disadvantages of the digital dollar

The Fed believes that the announcement of CBDCs in the United States will face many challenges, and the report notes that as payments continue, CBDCs can provide faster and more secure digital payment options for the housing and industry. There may also be side effects.

Positive gains include allowing the US dollar to retain control over global financial management, according to Bloomberg. The Fed also said CBDCs could improve cross-border payments, increase accounting and streamline spending on new technologies. However, CBDCs also have negative implications such as financial security risks and privacy issues.

“For example, withdrawal of deposits from existing banks increases or significantly affects the financial system. Another issue is privacy, as the government has direct access to the public economy.”

The statement did not provide details on how it would handle the privacy issue, saying the Fed should oppose the balance of consumer privacy protections and provide information that 'it must limit crime.

Additionally, CDBC systems could be an attractive target for hackers, making it particularly difficult to protect US CBDCs, according to the report.

"As our report explores the positive and negative impact of U.S. central bank digital currencies, we look forward to engaging with the public, elected officials, and many stakeholders," Fed Chairman Jerome Powell said in a statement. a statement.

Fed: Don't worry about the launch speed of the CBDC. This is the key to good deeds.

Reuters reported that the report was the result of a major push by Fed Chairman Jerome Powell in May to understand his involvement in digital payments. Powell has previously said that these (CBDC) projects must be widely supported and, in fact, approved by the government.

Meanwhile, Fed Chairman Lael Brainard, who was elected Vice Chairman and seen as the biggest supporter, argued that the US delay in lifting digital currency is ineffective because the industry has a competitive design.

But digital investors fear that the Fed's lag in its banking tranche will lag behind international competitors, especially China, which has entered the early stages of its digital yuan. However, Chairman Powell and other former Fed officials have spoken of the need to act without worrying about speeding up operations.

The report says that, isolated from the research, the Boston Fed worked with MIT to explore the potential of CBDCs, including coding that can be applied to US CBDCs. The study should be delivered at the beginning of February.