According to the Fed, a large, stable foreign CBDC is unlikely to affect the dollar’s utility as a value storage mechanism but its use as a medium of exchange could be dampened.
The U.S. Federal Reserve System’s board of governors recently released a research paper highlighting what it perceives as the pros and cons of developing and issuing a central bank digital currency (CBDC) to keep up with unnamed foreign powers.
As Cointelegraph reported back in 2021, U.S. Federal Reserve chair Jerome Powell has stated that the development of a U.S. CBDC is a “very high priority” for the government.
CBDCs are digital currencies that are controlled by the government issuing them. Proponents argue that the issuance of a U.S. CBDC will shore up the dollar’s position as the de facto international currency.
