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Michelle Neal, who is head of the bank's Markets Group, did not
say anything involving a central bank digital currency, or CBDC,
was imminent. But she explained that research efforts at the
bank identified how this type of money could benefit a key part
of the financial system.
Foreign exchange spot transactions "are critical in the context
of cross-border payments, and serve as a building block for
longer, more complex transactions," Neal said in the text of
remarks to be given before a conference in Singapore. She noted
that settlement of these trades take about two days, "which
leaves some room for improvement."
According to the research effort, a Fed digital dollar, used in
a wholesale capacity, and the technology to record transactions
"results in instant and atomic settlement."
Neal said the research work "indicated that settlement could
occur in fewer than 10 seconds on average and that horizontal
scaling was possible."
The Fed has been exploring for some time how it can launch a
fully digital dollar that some have referred to as Fedcoin. Fed
leaders have said that any launch of such an asset would need
the support of elected leaders.
Some central bankers have questioned whether a CBDC for the U.S.
is even needed at all.
(Reporting by Michael S. Derby; Editing by Kim Coghill)
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