Federal agencies release reports on creating a digital dollar

WASHINGTON — Federal agencies issued nine reports on Friday for developing a central bank digital currency, also known as the digital dollar.

The move follows President Joe Biden’s March executive order that urged the Federal Reserve to explore whether the central bank should create its own digital currency.

According to The Associated Press, central bank digital currencies, or CBDCs, differ from existing digital money available to the general public. CBDCs would be a direct liability of the Federal Reserve, not a commercial bank.

The reports released covered the impact of cryptocurrency on financial markets, innovation and other aspects of the economic system.

“These reports and their recommendations provide a strong foundation for policymakers as we work to realize the potential benefits of digital assets and to mitigate and minimize the risks,” Treasury Secretary Janet Yellen said in a statement following the release of the reports.

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The White House is focused on the risks and benefits of cryptocurrencies, including how a digital dollar might reinforce the U.S. role as a leader in the world financial system.

According to the Atlantic Council nonpartisan think tank, at least 105 countries are currently exploring or have created a central bank digitalcurrency.