What is Fedcoin?

Fedcoin is a digital currency proposal that would use the same blockchain technology as Bitcoin. Every penny could be traced to someone. Unlike Bitcoin, Fedcoin would not have a limited supply.

A Newsweek opinion column by David Andolfatto addressed this question Should the Fed Issue Its Own Bitcoin?

Fed Investigating Fedcoin

David Andolfatto is Vice President of the Federal Reserve Bank of St Louis. That tells you the Fed is seriously investigating Fedcoin.

Andolfatto listed these positives of "Bitcoin".

First, it's monetary policy reduces the "hot potato" motive of economizing on money balances—that is, it offers the prospect of being a decent long-run store of value.

Second, anyone with access to the internet can access an account (a public/private key pair) for free—like cash, no permission is needed. The public key is like an account number and the private key is like a password. Account balances remain secure as long as the private key remains secure.