Digital Currency Revolution Series: US Fed Studies Possibility of Digital Dollar and Its Impacts

In the era digital world, the digital currencies are evolving amid economic and financial turbulence across the globe. Regulatory frameworks have been conducive but stringent. 

For a classic instant, as the global regulators have been tormentors to slam and defer the plans of Facebook's Libra, many central banks are exploring the potential of their own sovereign digital currencies. Amid the confrontation of trade-war, World’s one of the biggest economies, China happens to be the pioneer in this driven by the political motives of ousting the significance of the dollar in the global economy.

From the recent past, there were lingering hush-hush that a top Fed authority has mentioned that the US Central Bank is pondering over the idea of a digital dollar, while Democratic and Republican members of Congress communicated with the Fed Chairman Jay Powell to know the implications of such a revolutionary adoption. 

In reply, the Chairman of the Federal Reserve, Powell, said to the US representatives French Hill and Bill Fosters, who had asked whether the Federal Reserve plans to launch a digital currency. In a descriptive letter in reply, he clarifies that they have observed the trends of digital currencies but they don’t have any plans of launching at this juncture reassuring the robustness of the demand for their currency.

But most importantly, he added in the letter: the Federal Reserve is not currently having any plans of CBDC (Central Bank Digital Currency) but will continue to analyze the potential benefits and costs of central bank digital currencies. 

At the same time, the former chairman of the CFTC (Commodity Futures Trading Commission) has advocated for the U.S. to establish and circulate a dollar-based digital token and ledger.

The timing of these considerations is not coincidental and reflects new challenges to America’s role as the lynchpin of the global financial system.