The American Federal Reserve (Fed) has now started the discussion about the meaning and purpose of a digital dollar.
On Thursday evening, the Fed presented a position paper on the e-dollar, in which it is still reluctant to make any specific statements.
In the development of the introduction of digital central bank money, the European Central Bank (ECB) is still ahead of the Fed, even though China's central bank has been publicly testing the e-yuan since last April.
Markus Fruehauf
Editor in Business.
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In its current paper, the Fed remains open as to whether a digital dollar should be introduced. Nevertheless, it is under pressure to act, because crypto assets such as Bitcoin are enjoying growing popularity despite high fluctuations in value.
In addition, the plans of the Facebook group Meta to introduce a currency-based stablecoin called Libra are causing further pressure.
The Fed now cites faster payments and greater security compared to privately organized digital competition as the advantages of a digital dollar.
However, she also points to the dangers to financial stability and data protection risks.
It is still unclear how digital central bank money can be made available to households without bypassing commercial banks.
In a financial crisis, these can also get into trouble if customers withdraw their deposits from their accounts and switch them to secure digital central bank money.
For example, the ECB is considering capping the amounts that private individuals are allowed to hold in the digital euro.
The Fed's public consultation now runs until May 20th.
After that, the central bank wants to examine further steps.
But she does not yet have a period for the introduction of a digital dollar.
Here the ECB is already further: It wants to introduce a first prototype in 2023.
Last year, ECB President Christin Lagarde named a five-year period for the introduction.