The U.S. Federal Reserve, the country's central bank, has been researching digital currencies along with several regional Federal banks.
The detail was revealed by Loretta Mester, president of the Cleveland Federal Reserve Bank, at a virtual event on Wednesday. Mester said several staff members of reserve banks, including Cleveland Fed software developers, are contributing to the research effort.
Previously, only the involvement of the Federal Reserve Bank of Boston was publicly known. The regional Fed bank has been working with the Massachusetts Institute of Technology to experiment with technologies that could be used for a central bank digital currency (CBDC). In June, the Federal Reserve Bank of New York also partnered with the Bank for International Settlements to research CBDCs, among other fintech areas.
While the Fed staff is researching CBDCs, Mester said no decision has been taken yet on how to proceed.
"Experimentation like this is an important ingredient in assessing the benefits and costs of a central bank digital currency, but does not signal any decision by the Federal Reserve to adopt such a currency," said Mester, adding:
"Issues raised by central bank digital currency related to financial stability, market structure, security, privacy, and monetary policy all need to be better understood."
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