The U.S. Federal Reserve recently published a research paper discussing the potential impact of developing and issuing a central bank digital currency (CBDC) to stay competitive with other nations. While Chair Jerome Powell has emphasized the importance of a U.S. CBDC, there are differing views on its benefits and drawbacks.
CBDCs, controlled by governments, are seen by some as bolstering the dollar’s global standing but criticized for centralization and privacy concerns. The Fed’s paper, authored by senior economists, examines how a U.S. CBDC could affect the dollar’s role in international payments.
While there’s confidence in the dollar’s stability as a value store, concerns linger about its utility as a medium of exchange compared to foreign CBDCs. This issue has sparked debate among U.S. politicians, including former President Trump vowing to oppose CBDC initiatives and some senators proposing a ban. Public opinion in the U.S. remains divided on the matter.