What are we talking about here?
Federal Reserve is taking an initial step towards launching its own virtual currency. The move is disturbing to banks as it gives millions of low-income Americans access to the financial system and fortifies the dollar’s status as the world’s reserve currency.
The rise of private cryptocurrencies is motivating the Fed to start considering a digital dollar to be used alongside the traditional paper currency. The biggest driver of causing the concern was a Facebook – led effort in 2019, to build a global payments network using crypto technology. Facebook’s action demonstrated how the private sector could, theatrically create a massive currency system outside of government control.
Globally, central banks around the world are also exploring the idea of issuing their own digital currencies. Fiat versions of cryptocurrency that operate more like physical cash. They would have some of the same technological benefits as other cryptocurrencies. Digital currencies would compete with banks by giving depositors alternative safe places to put their money.
Voicing the Pro – Senator Elizabeth Warren
“Legitimate digital public money could help drive out bogus digital private money, while improving financial inclusion, efficiency, and the safety of our financial system — if that digital public money is well-designed and efficiently executed,”
Fed explores ‘once in a century’ bid to remake the U.S. dollar, Politico, Victoria Guida, June 2021
As said at a hearing on Wednesday, which Senator Warren convened as chair of the Senate Banking Committee’s economic policy subcommittee.