What is a Central Bank Digital Currency?
Is the Federal Reserve moving toward adopting a digital dollar?

Central bank money traditionally takes two forms: cash and reserves held by eligible financial institutions at the central bank. Central bank digital currency (CBDC) is a generic term for a third version of currency that could use an electronic record or digital token to represent the digital form of a nation's currency. CBDC is issued and managed directly by the central bank and could be used for a variety of purposes by individuals, businesses, and financial institutions.

To date, no decision has been made on whether to issue a CBDC in the U.S. payment system. However, given the dollar's important role globally, it is essential that the Federal Reserve remains fully engaged in CBDC research and policy development. The Federal Reserve System is focused on better understanding the underlying technologies and their potentials, as well as policy issues associated with a CBDC. In addition to projects underway at the Board and the Federal Reserve Bank of Boston, the Federal Reserve is collaborating internationally in groups such as the Bank for International Settlements' CBDC coalition.

The Federal Reserve has a mandate to promote monetary and financial stability and the safety and efficiency of the nation's payment system. Included in that mandate is a commitment to ensure the public has access to a range of payments options and that financial institutions can effectively provide payment services.

Please see a video message from Chair Powell on developments in the U.S. payments system.

Accessible Keys for Video

[Space Bar] toggles play/pause;

[Right/Left Arrows] seeks the video forwards and back (5 sec );

[Up/Down Arrows] increase/decrease volume;

[M] toggles mute on/off;

[F] toggles fullscreen on/off (Except IE 11);

The [Tab] key may be used in combination with the [Enter/Return] key to navigate and activate control buttons, such as caption on/off.

Back to Top
Last Update: May 20, 2021