Definition ∞ A Digital Dollar Solution refers to proposals for a US central bank digital currency. This concept involves various models for creating a digital version of the US dollar issued and backed by the Federal Reserve. Such a solution aims to modernize the financial infrastructure, improve payment efficiency, and potentially enhance financial inclusion. Different proposals consider direct issuance to consumers or an intermediated model involving commercial banks.
Context ∞ The Federal Reserve and other US government agencies are actively researching and debating the feasibility and design of a Digital Dollar Solution. Key considerations include privacy, financial stability, and its impact on the existing banking system. The future development involves careful study of technological requirements, economic implications, and public policy objectives before any concrete implementation decisions are made.
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