The Boston, Massachusetts Federal Reserve has announced plans to potentially unveil a digital dollar in the coming years.
The Boston Fed Is Working on a Digital Currency of Its Own
As it stands, the plans won’t come about for a while, as the organization is basically toying with the idea for now, though it ultimately believes that the world will have to resort to digital currency in the coming future, and the Fed is looking to get a head start. The organization is working with researchers at renowned university MIT (the Massachusetts Institute of Technology) to get a better idea of blockchain and how it works.
Jim Cunha – senior vice president at the Boston Fed – announced in a statement:
We’re not building this for tomorrow. We’re building for future years.
The Fed says that it’s looking to understand why and how cryptocurrency has become so popular and hot in the last several years. Trading, buying and selling cryptocurrencies have been largely successful activities amongst traders and financial enthusiasts, and the Fed wants to know how something so obscure could have become so big in virtually no time at all.
Cunha further mentioned:
We’re really trying to understand what the technology can offer and if it’s a path we’d like to go down. I liken it to the early days of the internet.
This will not be the first time a nation or organization has looked to create its own digital currency. The country of China has already done so, having released a digital version of the yuan – the nation’s national fiat currency – earlier this year. Plans were initially announced in 2019 to several stints of controversy.
Many were concerned that the Chinese government would potentially use its digital currency to spy on the spending habits of users, which led to thoughts and worries regarding privacy, though regulators have stated that the currency was not created for this purpose.
In addition, the United States federal government has also announced plans to potentially establish a digital dollar to compete with tech-savvy nations and work against inflation, though these plans have not yet been fully divulged at press time.
Boston Fed assistant vice president Robert Bench is also working on the project. He says that people shouldn’t dismiss paper money altogether just yet, as the upsurge in crypto activity has a lot to do with the coronavirus pandemic. Once the strain has dissolved and people are safe again, it’s likely the dollar will return to dominance.
Don’t Dismiss Paper Money Altogether
Still, he does think digital currencies have a lot to offer. He explained:
When you’re dealing with something as high stakes as the U.S. dollar, you can’t break it. However, part of the great success of the U.S. technology sector has been its ability to move fast and break things, ideally at relatively low stakes.