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Fed's Rosengren says important to understand trade-offs of digital currencies

EconomyMay 12, 2021 01:01PM ET
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© Reuters. FILE PHOTO: The Federal Reserve Bank of Boston's President and CEO Eric S. Rosengren speaks in New York, April 17, 2013. REUTERS/Keith Bedford/File Photo

(Reuters) - The Federal Reserve is exploring the technology that would be required to establish a central bank digital currency, but more research needs to be done before it would move forward with a currency, Boston Fed Bank President Eric Rosengren said on Wednesday.

"It is important to highlight that this is exploratory work, and any decision to move forward with such a currency would depend on a variety of factors beyond the technological feasibility and implementation," Rosengren said in remarks prepared for a virtual event organized by Harvard Law School.

A central bank digital currency could improve financial inclusion, reduce the cost of cross-border financial transactions and provide more flexibility for implementing monetary policy, he said.

But Fed officials would need to fully consider the policy implications and trade-offs that come with using a digital currency, including possible threats to financial stability, Rosengren said.

The Boston Fed is doing research on the technology that could be used to create a hypothetical digital currency through a joint project with MIT’s Digital Currency Initiative.

They plan to release a white paper and open source code early in the third quarter of this year, and later phases of the research project will focus on privacy, anti-money laundering and other issues.

"It is important to understand what problems a central bank digital currency is being designed to solve, and whether other technologies could more cheaply or efficiently address those problems," Rosengren said.

Fed's Rosengren says important to understand trade-offs of digital currencies
 

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Comments (3)
James Pattison
James Pattison May 12, 2021 1:52PM ET
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Buy cardano...
Alan Rice
Alan Rice May 12, 2021 12:01PM ET
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US digital currency name contest starts today !! : DoggieDollar ?.....
Mart Bab
Rubberduck1973 May 12, 2021 10:42AM ET
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Buy Ripple now before its to late
 
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