The US Federal Reserve published the Digital Dollar White Paper

The US Federal Reserve has unveiled the Digital Dollar White Paper, calling on the public to express their opinions on the advantages and disadvantages of using it.

According to the published document, the current US financial system can be strengthened with the help of the digital dollar. However, this is only possible if it is to be used by private banks and not issued directly to ordinary users. This means that commercial banks and other payment institutions will act as intermediaries between the Fed and users, which will allow banks to maintain their place in the financial system.

As the regulator noted, the publication of the document on the digital dollar does not yet guarantee that the Central Bank’s digital currency will actually be launched. However, public discussions on this topic can “shed light” on what characteristics a digital dollar should have, and what is needed for its potential launch. The authors of the document suggest that the state stablecoin will better meet the needs of the United States.

The Fed researchers explained that the digital dollar should be widely used, but not pose a threat to the financial stability of the country. In addition, when using a digital dollar, the privacy of users must be well protected, but its owners will have to go through identification.

“The digital dollar, like any digital currency of the Central Bank, must find a balance between protecting consumer privacy rights and ensuring transparency to prevent criminal activity,” the document states.

To launch the digital dollar, the agency intends to achieve full support from both the executive branch of the US federal government and Congress. This implies the creation of a special law, which will stipulate the conditions for the launch of the digital dollar and its functioning.

Now the dollar, being the world’s reserve currency, is widely used for investment and making international payments. Therefore, the document notes that one of the advantages of the digital dollar could be the continued hegemony of the US dollar, especially in the future, as more central banks are exploring the possibility of launching their own digital currency.

The Fed is ready to accept public comments within 120 days. Following the release of the agency’s report on the digital dollar, US Senate Banking Committee Chairman Sherrod Brown announced his willingness to work with the Fed and lawmakers. He believes that the digital dollar will provide an opportunity for individuals, small businesses, local banks and credit unions to take an active part in the development of the US digital economy.

“The Fed’s Digital Dollar Report is the first step towards developing a central bank digital currency. Its launch will help bring more Americans into our banking system and keep the US in the lead in the global economy,” Brown said.

Pennsylvania Senator Pat Toomey was also encouraged by the Fed’s report, but raised concerns about the privacy of the digital dollar. According to him, the Fed failed to clearly explain how user transaction data will be protected. In addition, Toomey had a question whether it would be possible to make peer-to-peer transactions using a digital dollar, since this characteristic is considered fundamental.

Earlier, a member of the board of directors of the US Federal Reserve, Lael Brainard, said that the US needs a digital dollar to compete with other countries. Meanwhile, the US Congress believes that the digital dollar should not be used to spy on citizens.