On 1/20/2022, the Federal Reserve Board released a discussion paper that examines the pros and cons of a potential U.S. central bank digital currency, or CBDC. The Board invites comment from the public as the first step in a discussion of whether and how a CBDC could improve the safe and effective domestic payments system.
The paper, titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation”, summarizes the current state of the domestic payments system and discusses the different types of digital payment methods and assets, such as stablecoins and other cryptocurrencies, that have emerged in recent years. It also details other key policy considerations such as downsides of using a digital currency, how to ensure a CBDC would preserve monetary and financial stability, and how it will complement existing means of payment. The report concludes by exploring the potential benefits and risks of a CBDC, and by identifying specific policy concerns.
The Board will be accepting comments for 120 days from the date of its release.
See the full announcement here.
Read the paper here.
