<h2>United States Federal Reserve System Explores CBDC and Its Risks</h2>
The <a href="https://www.cryptoknowmics.com/crypto/us-federal-reserve-could-issue-digital-currencies-in-the-future/">United States Federal Reserve system</a> is going through the advancements of a <a href="https://en.wikipedia.org/wiki/Central_bank_digital_currency">central bank virtual currency</a> (CBDC). Also, it is exploring what issues it could pose and what affects it has on the financial system.
Moreover, the chairman of the Federal Reserve Board, Jerome Powell responded to U.S representatives, French Hill and Bill Foster's request on whether the Federal Reserve plots to initiate a national virtual currency. And the chunk of news was tweeted by the Zachary Warmbrodt, the financial services reporter on Nov 20.
In the letter, Powell put down the Federal Reserve's thoughts on the development of a CBDC. He stated, though agency is not creating a CBDC, it has evaluated the costs and advantages of this initiative.
Furthermore, Powell stated that the agency is carrying out its own research-based experiments. And the experiment is being carried out to obtain the experience and boundaries of CBDCs.
<h3>CBDCs lift an Array of Legal Issues</h3>
Powell said before releasing the CBDC, Federal Reserve has to seek a great deal of questions. And these queries include monetary and payments policies, financial stability, supervision, and operational concerns. Along with these questions, the Federal Reserve has to seek its vulnerability to cyber invades. Powell went on saying:
“If it is designed to be financially transparent and provide safeguards against the illicit activity, a general-purpose CBDC could conceivably require the Federal Reserve to keep running record of all payments data using the digital currency [...] and sometimes that raises issues related to data privacy and information security.”
<h3>Representatives' Response to the Letter</h3>
Representative, Hill responded to Powell's letter and showed the excitement that the Federal Reserve is going through whether there is a point to releasing CBDC. he said:
“This decision would have far-reaching implications on every aspect of America’s monetary policy. And requires a deep level of analysis to ensure proper implementation.”
Representative, Foster stated:
"My main concern is that we are not caught flat-footed by fast moving developments in other countries that may put our economy at a competitive disadvantage and threaten the primacy of the U.S. dollar.”

United States Federal Reserve System Explores CBDC and Its Risks

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