By Jonnelle Marte

(Reuters] – Although creating a digital copy of the U.S. currency could increase payments speed and give households a secure option in the era of payments technology advancements, there would still be privacy risks and financial stability issues. This was the Federal Reserve’s long-awaited statement released on Thursday.

It did not make any policy recommendations or give any indication of where the Fed stood on whether to create a central bank digital money, also known as CBDC. The Fed also stated it will not create one “without the clear support of the executive branch” and Congress (ideally, in the form an authorizing law).

However, it allows the central banks to gather public feedback regarding the benefits and costs of this approach. It is being explored increasingly by large economies all over the globe.

The report stated that a CBDC “could provide a safer, digital option for household and business payments as the system continues to evolve” and could help speed up payment options between countries.

The Fed stated that the Fed faces challenges in maintaining financial stability as well as making sure the digital currency would “complement existing methods of payment”. Prior to embarking on the CBDC, the central bank needs to address key policy questions. This includes making sure that Americans are not harmed by it and that government has “ability to combat illegal finance.”

The paper, while not making any recommendations, did offer some insights into the possible functioning of CBDC in real life. The analysis revealed that CBDC is most appropriate for U.S. use if it was “intermediated” by the existing financial system. This means individuals wouldn’t have CBDC accounts with the Fed directly. Fed officials stated that nothing is impossible.

Fed Chair Jerome Powell released the paper in January. The paper summarizes current payments, and also includes stablecoins, and other cryptocurrency. For 120 days, comments on this issue are welcome.

It states that “the paper is not designed to promote any particular policy outcome nor signal that the Federal Reserve is about to make any immediate decisions regarding the properness of issuing U.S. CBDC.”

Powell stated that he wants such a project broad support. He also hopes it will be the outcome of congressional action. A CBDC is a topic that divides the Fed board.

A CBDC, unlike cryptocurrencies which can be run by individuals and have volatile prices swings, would be issued by the central bank and backed by it. The CBDC could also be used to give consumers direct access to the central banks, in the same manner as with physical cash.

Separate from the research being done by the Boston Fed and the Massachusetts Institute of Technology, Thursday’s paper is an exploration of the technical aspects of CBDC. This technical research will include coding that can be used to create a U.S. CBDC. It is expected to be published as soon as next month.

The Fed reports that about 90 countries (from the Bahamas to China) have created or launched their central bank digital currencies, according to Atlantic Council research.