Eric Rosengren – the former president of the Federal Reserve Bank of Boston – stated in an interview that he is quite fond of the idea of a digital dollar. He thinks the United States would benefit greatly from using such a tool, and he’s convinced it will not get in the way of bitcoin’s path towards greatness.
Eric Rosengren Thinks a Digital Dollar Could Work for the Country
If only China could have such an attitude. One of the big reasons, analysts speculate, why China has ultimately eliminated both bitcoin and its crypto mining industry over the past few months is because the country does not want any competition for the digital yuan, which is the virtual form of its national currency. The asset was introduced in late 2019 and has already gone through several stages of testing, including being worked into the payment systems of various American companies such as Subway.
In addition, a select group of individuals have been chosen to use the digital yuan for payments. Surely, the digital yuan could have operated alongside bitcoin and other digital assets, but China clearly felt otherwise. It has since forced all its crypto miners to move elsewhere and has declared all bitcoin and digital currency transactions illegal.
Rosengren says the Boston Fed and MIT are making “very good progress” towards creating digital bank notes that Americans can use in the same way they would cash. He says that one of the big benefits of such a tool is that transactions will be extremely fast. He commented:
The technology for the core processing is there… That is not to say that [we have] a fully developed digital currency. There’s still significant work that needs to be done on privacy and resilience on security, and as those various issues are tackled, it’s likely to slow both the throughput and possibly the transaction speed, and obviously we haven’t had the policy discussion in Washington yet.
How Would It Work?
The Fed has stated that it will be releasing a report detailing the asset in the next few weeks. Rosengren further stated:
I think it’s really important that we move the technology along so that whenever that policy discussion is done, we have the capability to launch, but until the policy discussion has been fully developed, I think it’s going to be very difficult to predict when or if [central bank] digital currency will come to the U.S.
The notes would work as a central bank digital currency or CBDC. Right now, there are no specific laws in place regarding such assets as this is the first time the United States would ever issue such a product. However, he did comment that the notes would operate in a manner similar with stable coins, in which they are backed by standard fiat to ensure holders do not experience value losses.