The U.S. Federal Reserve continues to experiment with a central bank digital currency, or a digital dollar, Gov. Lael Brainard says.
Brainard said the Fed has been examining distributed ledger technologies to determine how electronic money can influence payments infrastructure, financial strength and the banking industry.
The Boston Fed and the Massachusetts Institute of Technology have conducted a "multiyear program" to develop a theoretical virtual cash aligned with Federal Reserve applications," Brainard said.
Brainard said the continuing coronavirus pandemic solidified the necessity for fast and reliable access to funds. He said people getting emergency cash during the crisis spent the money immediately, he said.
Considering the critical role the U.S. currency plays internationally, it is important the central bank continues to explore virtual currencies, Brainard said. The central bank has taken a proactive stance in studying a central bank digital currency.
In the past U.S. central bank officials weren't keen on virtual money but their interest rose after Facebook started to work on its own electronic currency for users of its social networking platform.
A U.S. virtual currency could revolutionize the way financial dynamics function in the economy as well as fast-track payments that remain sluggish and time-consuming, they said.
