The head of the Federal Reserve Bank of Cleveland is offering a rare look at the Fed’s research on the creation of a digital dollar.
In a keynote speech at the Chicago Payments Symposium, Federal Reserve Bank of Cleveland CEO Loretta Mester revealed the organization is exploring a system that would allow the Fed to easily deposit digital dollars into accounts held by US citizens.
Mester says that the research had been ongoing since before the COVID-19 pandemic, but that the crisis put a stronger emphasis on the effort.
The Fed CEO says there are several additional ideas brewing within the Reserve Banks.
“Other proposals would create a new payments instrument, digital cash, which would be just like the physical currency issued by central banks today, but in a digital form and, potentially, without the anonymity of physical currency.
Depending on how these currencies are designed, central banks could support them without the need for commercial bank involvement via direct issuance into the end-users’ digital wallets combined with central-bank-facilitated transfer and redemption services.”
