No US CBDC yet: US Treasury and White House postpone any real decision making

The US Treasury’s The Future of Money and Payments report said:

A U.S. CBDC has the potential to offer significant benefits, but further research and develop- ment on the technology that would support a U.S. CBDC is needed, and could take years.

The Federal Reserve is encouraged to: continue its research and technical experimentation on CBDCs, including its work on analyzing the possible choices of technology and other design elements of a CBDC; continue evaluating policy considerations as described in its January 2022 discussion paper; find mechanisms to provide the public with periodic updates on these initiatives, given the strong public interest in this topic; and consider how research and development on digital assets and other related innovations that is conducted or sup- ported by other Federal agencies could support a U.S. CBDC.

To support the Federal Reserve’s efforts and to advance further work on a possible U.S. CBDC, actions in the following areas should be taken:

  • The Treasury Department will lead an inter-agency working group (“CBDC Working Group”) to coordinate and consider implications of adoption of a U.S. CBDC for policy objectives such as national security, democratic values, the smooth functioning of the international financial system, financial inclusion, and privacy. The CBDC Working Group will continue to assess the merits of a CBDC and leverage cross-government technical expertise to the extent useful for Federal Reserve efforts.
  • The CBDC Working Group will engage in information sharing with allies and partners on CBDC policy priorities, and support the Federal Reserve, as appropriate, in engag- ing with allies and partners to promote shared learning and responsible development of CBDCs.
  • The principals and/or deputies of the Federal Reserve, National Economic Council, National Security Council, the Office of Science and Technology Policy, and the Treasury Department will meet regularly to discuss the progress of the CBDC Working Group and share updates on CDBC and other payments innovations. Representatives from other offices and agencies within the Executive Branch will join, as appropriate.

The White House’s Technical Evaluation for a U.S. Central Bank Digital Currency System said:

The Federal Reserve is already doing significant experimentation on CBDC systems and is leading a broad program rooted in the fundamental nature of a CBDC as a liability of the central bank. For example, the Federal Reserve Board’s Technology Lab is pushing forward a significant amount of research and experimentation related to CBDC systems; the Federal Reserve Bank of Boston is working with a university to explore innovative arrangements for retail CBDC payments; and the Federal Reserve Bank of New York is collaborating with the Bank for International Settlements on wholesale CBDC payments. The Federal Reserve also published a discussion paper in January 2022 titled Money and Payments: The U.S. Dollar in the Age of Digital Transformation,62 which solicited comments on a variety of policy considerations and discussed ongoing technological experimentation.

The Federal Reserve is well-positioned to continue research and technological experimentation as described in its January 2022 discussion paper and on the Federal Reserve Board’s public website. This approach has been relatively nimble – driven by small teams within one agency – and has facilitated experimentation and collaborations in new directions. Additionally, other departments and agencies should also pursue their own experimentation to tackle discrete questions involving the potential application of CBDC systems in their areas of responsibility. To this end, other agencies should continue to engage bilaterally with the Federal Reserve, as well as through the CBDC Working Group.

It will be vital to bring an all-of-government approach to bear on a digital assets R&D agenda. The R&D agenda should shape and be shaped by other efforts across the Federal government. For example, the National Laboratories and the Defense Advanced Research Projects Agency could marshal some of their technical expertise and resources directly toward tackling some of the questions in the R&D agenda. Agencies engaged in standards-setting activities, such as NIST and Treasury’s Office of Financial Research, might work with relevant agencies to push forward international technical standards-setting efforts related to digital assets.

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