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What is a digital dollar?
The digital dollar, also called a Fedcoin, is the concept of a US government central bank digital currency (CBDC). While the Federal Reserve has researched the concept, the US – along with other advanced economies – largely views CBDCs as more of a threat than opportunity The potential for disintermediation and disruption of the private sector is one main reason why the large advanced economies have moved slowly on CBDCs. A Fedcoin would be a digital fiat complement to paper US banknotes and coins – representing, like cash, a claim on the Federal Reserve. As a bearer instrument backed by the full faith and credit of the US government, a digital dollar would have virtually no counterparty risk and embody both payment and settlement – in short, it would be the most liquid asset in the global economy.