The Chairman of the Federal Reserve Board of Dallas, Robert Kaplan, believes that the US central bank should start work on a digital currency immediately, which is a clear indication that some policymakers are considering this an urgent matter.
Speaking on Tuesday at a virtual conference hosted by Bloomberg, Kaplan is reported to have said:
"It is important for the Federal Reserve to focus on developing a digital currency in the coming months and years."
The central bank governor's comments were part of a broader discussion on the economy and fiscal policy.
Kaplan is a member of this year's Federal Open Market Committee (FOMC), the organization tasked with setting monetary policy. The 2020 Commission lowered interest rates to record lows in March as part of a concurrent policy response to COVID-19. Kaplan and the rest of the FOMC have played a key role in flooding the market with liquidity since September 2019, when irregularities in the overnight repurchase market caused short-term interest rates to spike.
Of course, blockchain technology is on policymakers' radar. Last month, Federal Reserve Chairman Jerome Powell said that 80% of central banks around the world were exploring the potential benefit of central bank digital currencies. While the Fed did not provide any indication of whether the digital dollar will come soon, it has hired economists to explore the subject in more detail.
On Monday, the Federal Reserve released a research review on central bank digital currencies (CBDCs), to explore the impact of the digital dollar on commercial banking and monetary policy. The review concluded with a recommendation to devote additional research to exploring the drivers of the "intrinsic" value of the government digital currency.
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