Federal Reserve Working With MIT to Develop Digital Currency

The Federal Reserve Bank of Boston is partnering with the Massachusetts Institute of Technology to develop, test, and research a hypothetical digital currency over a two to three year period.

Federal Reserve Board Governor Lael Brainard said that the Fed is investigating whether a central bank digital currency (CBDC) would be safe and efficient for widespread use.

“Given the dollar’s important role, it is essential that the Federal Reserve remain on the frontier of research and policy development regarding CBDCs,” Brainard said at the Federal Reserve Bank of San Francisco’s Innovation Office Hours. “As part of this research, central banks are exploring the potential of innovative technologies to offer a digital equivalent of cash. Like other central banks, we are continuing to assess the opportunities and challenges of, as well as the use cases for, a CBDC, as a complement to cash and other payments options.

Boston Fed President Eric Rosengren said they are trying to “determine if they can meet the design requirements of a U.S. based central bank digital currency.” If the Fed does ever decide to issue its own CBDC down the road, a legislative process to address all the legal questions would need to take place.

“Separately, a significant policy process would be required to consider the issuance of a CBDC, along with extensive deliberations and engagement with other parts of the federal government and a broad set of other stakeholders,” Brainard said Thursday. (Read more from “Federal Reserve Working With MIT to Develop Digital Currency” HERE)

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