Making the dollar an official digital currency would provide americans with more and faster payment options, but it would also increase financial stability risks and privacy concerns for those who live in the united states. however, a cbdc would be issued and backed by the government, which is not the case with most cryptocurrencies. according to the federal reserve board, central bank digital currency (cbdc) has both advantages and downsides when used as a payment system in the united states. in addition, as the federal reserve points out, a cbdc might help to improve the domestic payments system while simultaneously maintaining its safety and effectiveness.

it is being considered by the fed as an alternative to lowering or replacing safe central bank money, to encourage more people to use it. instead of depending on commercial banks, consumers would be able to file a claim against the central bank directly. thru an online form, the federal reserve will accept comments on the possibility of a digital dollar for the next 120 days. some democrats believe that a digital currency may be beneficial to the unbanked, and they want the federal reserve to issue cbdc accounts to individuals.

with the help of this tool, low-income households may be able to lower their transaction costs and increase their financial inclusion. cbdcs will improve the international standing of the dollar if they are adopted by a large number of countries.

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