Federal Reserve Governor Lael Brainard has announced that the US central bank is studying the feasibility of a digital currency. The Bank for International Settlements and the International Monetary Fund have called for central banks to at least study the possibility of digital currencies as private sector firms propose and experiment with a competing units of exchange. Such initiatives include Facebook Inc.’s proposed global digital currency Libra.
The Fed governor listed several topics that needed further study, including whether a CBDC reduce costs and operational vulnerabilities; what kinds of banks or financial firms would offer digital currency accounts and who would oversee them; and what kinds of financial stability risks would be raised by digital currencies.
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