The digital dollar can strengthen financial stability. Analysts in the Office of Financial Research at the U.S. Department of the Treasury (OFR) came to this conclusion.

Experts evaluated exaggerated fears about the possibility of a “banking panic” in the event of a crisis due to the launch of the digital dollar. Earlier, FRS had mentioned such risks in its report as a negative consequence of the emergence of CBDC.

According to OFR analysts, the digital dollar will provide authorities with an early warning system for problems in the financial system. Such a signal would be the active conversion of funds to CBDC.

“Monitoring will allow supervisors to quickly identify when a banking panic has started and respond to threats posed by troubled banks.” says document.

According to experts, such information may reduce the willingness of the institution’s large investors to initiate this process.

Analysts also pointed to reduced incentives for customers of a “weak bank” to transfer funds to a more reliable institution during “quiet times”. This will be possible due to the more conservative policy of financial institutions compared to the situation before the emergence of CBDC.

“We think [отчет OFR] as a tool that supporters of the digital dollar can use to justify plans for its launch”, — wrote Jareth Seiberg, analyst at Cowen Group.

The results from the report are consistent with recent comments from Fed Vice Chairman Lael Brainard, who sees the CBDC as a neutral and credible level of agreement in the future crypto-financial system.

Recall that in June 2022, the BIS called national digital currencies the basis of the monetary systems of the future.

Earlier, at a congressional hearing, Fed Chairman Jerome Powell announced the preparation of a strategy for the implementation of the CBDC.

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