Fed suggests best CBDC be privacy-protected, widely transferable and identity-protected

Fed CBDC

  • Any CBDC would best serve US interests by being privacy-protected, intermediated, widely transferable and identity-protected
  • There’s no recommendation on adopting a CBDC, as Powell had said
  • Paper not intended to signal it will make any imminent decision about the appropriateness of issuing CBDC
  • Does not intend to proceed with CBDC wihout clear support from executive branch and congress
  • Powell “We look forward to engaging with the public” on the report
  • The paper seeks public comment for 120 days’
  • Full report

“This paper is the first step in a public discussion between the Federal Reserve and stakeholders
about central bank digital currencies,” the paper says.

The Fed has been teasing this report for a long time.

It highlights potential benefits, for instance “It could provide households and
businesses a convenient, electronic form of central bank money, with the safety and liquidity that
would entail; give entrepreneurs a platform on which to create new financial products and services; support faster and cheaper payments (including cross-border payments); and expand consumer access to the financial system,”

For instance, China is pushing a CBDC because it’s worried about ceding the financial system to Alipay and its competitors.

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