The US Federal Reserve took a step toward developing a digital currency as it announced plans to publish a research paper on the subject. The aim is to gather public comment and get the US play a “leading role” in the development of international standards, said Fed chairman Jerome Powell in a video message. 

“To help stimulate broad conversation, the Federal Reserve Board will issue a discussion paper this summer outlining our current thinking on digital payments, with a particular focus on the benefits and risks associated with CBDC in the U.S. context,” Powell said. “As part of this process, we will ask for public comment on issues related to payments, financial inclusion, data privacy, and information security.” 

The announcement takes the concept of a “digital dollar” from a small research project into something potentially larger. The Fed aims to explore how “central bank digital currencies” or CBDCs could fit into the US banking system. 

At the same time, the Fed is likely trying to accelerate work toward a potential US digital currency as other nations, particularly China, are farther along. Last December, China announced that select users could spend digital yuan given out in a lottery-type experiment. Digital currency is seen as a way for a China to not just a way to bolster its own monetary system, but as a tool for soft power internationally. 

To that end, Powell emphasized that while the US hasn’t come to any conclusions on a digital dollar, “we expect to play a leading role in developing international standards for CBDBs,” he said. That make take some time, however, as he added that the decision will require “careful thought and analysis” from the public and elected officials.