January 25, 2022
The Federal Reserve’s paper, Money and Payments: The U.S. Dollar in the Age of Digital Transformation, looks into pros and cons of creating CBDC in the US. Even though the paper invites comments from the public, it doesn’t favor any particular policy outcome.
Here is what you need to know:
- The Fed indicates that this is just a first step to get an idea about if CBDC can improve the domestic payment system while keeping it safe. The paper highlights five potential benefits and five key risks that a CBDC would create.
- The paper further noted that payments through bank accounts, online transactions, and payment apps are liabilities of private entities but CBDC would be a liability of a central bank, in this case the U.S. Federal Reserve System.
- The paper also hints that the Fed has studied the possibility of creating a U.S. CBDC for many years.
- The Fed which is concerned about the usage of crypto for terrorist activities or money laundering said that, CBDC must be intermediated, transferable and identity-verified.
- The Fed further states that no matter what the final outcome of the U.S. CBDC, it aims to take an active role in formulating international standards for CBDCs.
- Fed is also ready to take views from a wide range of people to get an understanding of the public’s perspective. There are 22 questions, which the public can answer before May 20, 2022.
Image: Wikimedia commons
About the author
Priyanka Shetty is a full-time communication professional and a part-time crypto writer based in Bengaluru. She can write about crypto but not so much about herself. She says she is just a girl who wants to meet your dog.