A U.S. digital dollar is on the way with the Federal Reserve revealing details in a new paper.
According to this paper, the Fed is looking to introduce a U.S. digital dollar called the central bank digital currency (CBDC). This would allow citizens to download and use an app for payments.
Of course, that’s only if people start making use of the app. A CBDC sounds great on paper but not everyone is going to get behind the Federal Reserve having greater insight into their finances. It’s also worth mentioning that the U.S. Government would need a major overhaul of its financial networks to avoid cyber attacks.
While that’s a definite hindrance to a U.S. digital dollar, there are some benefits. That includes giving people without bank accounts easier access to e-commerce and digital payment services. It would also make it easier for the government to send out certain payments, such as tax returns or economic relief payments, reports The Hustle.
So when can we expect the CBDC to start showing up on smartphones? Bank of America says that a U.S. digital dollar is inevitable and will likely appear sometime between 2025 and 2030.
While that’s still a ways off, there are other options that work in lieu of a digital dollar: stablecoins. These are a type of crypto connected to the value of a fiat currency. Tether (USDT-USD) and USD Coin (USDC-USD) are two examples of stablecoins tied to the U.S. Dollar.
With interest in digital currency growing, stablecoins are expected to see growth in the coming years. We’ll have to wait and see if that continues after the CBDC is introduced.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.