Digital Yuan Effect? The Federal Reserve Bank of Boston Is Evaluating Over 30 Blockchains for Digital Dollar
Syncing with one of the hottest trends of the year and building on previous researches, the Federal Reserve Bank of Boston is said to be evaluating over 30 blockchains to determine whether they would support a digital dollar reports CoinDesk on Aug 24. The regional bank is one of the 12 operating under the central bank of the United States, the Federal Reserve.
The Digital Currency Initiative
The idea of a central bank digital currency (CBDC) is gaining traction. For a successful implementation, a central bank often tasked with minting currency and execution of monetary policy will leverage any of the selected blockchain’s capacity to print a digital, complementary version of the greenback.
Earlier this month, together with the Massachusetts Institute of Technology (MIT), the Boston FED said it was testing a tokenized version of the USD under the Digital Currency Initiative (DCI) though it said the collaboration was to explore the technological aspect of candidate blockchains.
Of note, the bank and its partner will be checking the blockchain’s scalability, resistance to attacks, and privacy.
Is the Digital Dollar a Good Idea?
The results are yet to be published to determine the viability of a tokenized greenback but the most fundamental question the DCI seeks to answer is whether the prospect of a digital dollar is a good idea.
At the end of their experimentation, their finding will influence policy should the central bank decide to move on with the idea of a digital dollar.
Commenting, the Boston FED Vice President Jim Cunha said:
“What we’re doing now really is much more thorough, much more building a platform to see whether distributed ledger can meet the needs of a U.S.-based central bank digital currency. Can it actually function?”
Regardless of the path taken by central banks, the reception of CBDC is mixed and could have severe implications on privacy. A well-executed CBDC plan means a bank can in real-time survey holders, tracking the coin’s movement inevitably giving the state an unprecedented and broad insight into their subject’s finances.
The Digital Yuan Status
The PBoC is already at an advanced stage of their digital Yuan. Planned for rollout before the Beijing Winter Olympics in 2020, BTCManager recently reported of their expansion and addition of more pilot partners.