Home CBDC Fed Shares Research and Experimentation Undertaken to understand CBDC better

Fed Shares Research and Experimentation Undertaken to understand CBDC better

  • Federal Reserve shared the news of in-depth research and experimentation being undertaken to gain better idea about the strength, scope and threats involved in dealing with Central Bank Digital Currencies
  • Federal Reserve Board’s Technology Lab (TechLab) in conducting experiments with technologies relevant to cryptocurrencies and other new age payment options
  • The Federal Reserve Bank of Boston is also collaborating with the Massachusetts Institute of Technology (MIT) on an effort to come up with a hypothetical digital currency specially designed for central bank use

On August 13, the Federal Reserve shared the news of in-depth research and experimentation being undertaken to gain a better idea about the strength, scope and threats involved in dealing with Central Bank Digital Currencies (CBDC). This project is being carried out in addition to a range of payment-focussed innovation projects currently underway at the Federal Reserve System.

As per Federal Reserve Board Governor Lael Brainard, it is essential that the institution keeps abreast of the latest developments on central bank digital currencies, specifically because the US Dollar still plays a crucial role in the global economy. He added that as a central bank, study and evaluation of the scope and risks associated with a cryptocurrency was necessary, just as it is done for cash and other forms of money.

The goal is to endorse a secure, transparent and efficient method of payment, which has led the Federal Reserve Board’s Technology Lab (TechLab) in conducting experiments with technologies relevant to cryptocurrencies and other new age payment options. The TechLab is a multidisciplinary team comprising Board and Federal Reserve Bank employees who are highly skilled in matters of payments, economics, law, IT, and computer science.

The Federal Reserve Bank of Boston is also collaborating with the Massachusetts Institute of Technology (MIT) on an effort to come up with a hypothetical digital currency specially designed for central bank use. This is aimed at strengthening the Board’s efforts in assessing the safety and efficiency of CBDC systems. The project focusses solely on developing an understanding of the capacities and limitations of the relevant technologies. Additionally, the Federal Reserve also continues its collaboration with other central banks and international organisations to further the goal of understanding of central bank digital currencies.

A per a Forbes report,  Robert Bench,  assistant VP for Secure Payments group for the Federal Reserve Bank of Boston was interviewed at a ‘Digital Dollar Live’ webinar, in which he has compared the importance of creating a digital tokenised USD to compete with China and maintain the global reserve currency status for America.

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Piyasi Mitra
Piyasi Mitra is a journalist, features writer and copy editor who has worked with The Times of India and the ABP Group, and is currently exploring content creation in the digital space.

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