WASHINGTON -- The Federal Reserve on Thursday released a highly anticipated report on central bank digital currencies that suggested it is leaning toward having banks and other financial firms, rather than the Fed itself, manage digital accounts for customers.
A central bank digital currency would differ in some key ways from the online and digital payments that millions of Americans already conduct. Those transactions are funneled through banks, which wouldn't be necessary with a digital dollar.
The Fed's paper stressed that no final decisions about a digital currency have been reached. But it suggested that a digital currency that "would best serve the needs" of the nation would follow an "intermediated model" under which banks or payment firms would create accounts or digital wallets.
The Fed characterized the potential introduction of a digital currency as a step that could have far-reaching consequences for banks and other financial firms as well as for the central bank itself.
"The introduction of a [central bank digital currency] would represent a highly significant innovation in American money," the study said. The Fed said it "could fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank."
The Fed is likely years away from actually issuing a digital currency, if it decides to do so. The paper released Thursday kicks off a 120-day comment period, during which the Fed will seek input from the public. Fed officials said the central bank has made no decisions about a digital currency or how it would work. The Fed also says that it would proceed only if Congress specifically passed a law authorizing a digital currency.