Fed to Publish CBDC Paper
Posted by Colin Lambert. Last updated: May 22, 2021
The US Federal Reserve is to publish a discussion paper in the coming months on the potential for a US central bank digital currency (CBDC).
In a video message broadcast by the Fed, governor Jerome Powell said the US central bank was “carefully monitoring and adapting to the technological innovations now transforming the world of payments, finance, and banking”.
The Fed says technological advances are driving rapid change in the global payments landscape and stresses it is studying these developments and exploring ways that it might refine its role as a core payment services provider and as the issuing authority for US currency.
Noting that the new technology offers new possibilities to central banks, the Fed says that while various structures and technologies might be used, a CBDC could be designed for use by the general public.
It continues by observing that as it explores the potential benefits and risks of CBDCs, the key focus is on whether and how a CBDC could improve on an already safe, effective, dynamic, and efficient US domestic payments system in its ability to serve the needs of households and businesses. “We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks,” Powell said in the video. “The design of a CBDC would raise important monetary policy, financial stability, consumer protection, legal, and privacy considerations and will require careful thought and analysis—including input from the public and elected officials.”
The discussion paper will explore the implications of fast-evolving technology for digital payments, with a particular focus on the possibility of issuing a US central bank digital currency, and will complement Federal Reserve System research that is already underway.