Dozens of countries’ Central Banks are researching a digital form of money
The financial services industry, braced for what could be its biggest disruption in decades, is about to get an early glimpse at the Federal Reserve’s work on a new digital currency
Banks, credit card companies and digital payments processors are nervously watching the push to create an electronic alternative to the paper bills Americans carry in their wallets, or what some call a digital dollar and others call a Fedcoin.
Speaking before the Senate Banking Committee on Feb. 23, Federal Reserve chair Jerome Powell said that developing a digital dollar for the United States is a “high priority.”
As early as July 2021, officials at the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology, which have been developing prototypes for a digital dollar platform, plan to unveil their research, said James Cunha, who leads the project for the Boston Fed.
A digital currency could fundamentally change the way Americans use money, leading some financial firms to lobby the Fed and Congress to slow its creation — or at least ensure they’re not cut out.
Seeing the threat to their profits, the banks’ main trade group has told Congress a digital dollar isn’t needed, while payment companies like Visa Inc. and Mastercard are trying to work with central banks to make sure the new currencies can be used on their networks.
Lawmakers, U.S. Treasury Department officials and the Fed haven’t yet approved the rollout of a U.S. virtual currency, which could still be years away. Nor have they decided how a digital dollar would interact with the existing global payments network. Still, the U.S. and other countries seem committed enough to digitizing their currencies that it’s making financial industry executives nervous.
“The fire has been lit,” said Josh Lipsky, who has helped convene government officials from the U.S. and other countries working on digital currencies as director of the GeoEconomics Center at the Atlantic Council. “The world is moving very quickly on these projects.”
