In recent remarks, the US Department of the Treasury’s under secretary for Domestic Finance Nellie Liang spoke about next steps in the future of money and payments.
Central Bank Digital Currency (CBDC) is one of several options for upgrading the legacy capabilities of central bank money. Another is real time payment systems: The Federal Reserve has indicated that it expects to launch the FedNow Service this year, which will be designed to allow for near-instantaneous retail payments on a 24x7x365 basis, using an existing form of central bank money (i.e., central bank reserves) as an interbank settlement asset. In contrast, a CBDC would involve both a new form of central bank money and, potentially, a new set of payment rails. Both real time payment systems and CBDCs present opportunities to build a more efficient, competitive, and inclusive US payment system.
In the United States, policymakers are continuing to deliberate about whether to have a CBDC, and if so, what form it would take. The Fed has also emphasized that it would only issue a CBDC with the support of the executive branch and Congress, and more broadly the public. Even as policy deliberations continue, she said authorities are engaging in the technological development of a CBDC to move forward rapidly if a CBDC were determined to be in the national interest.
Treasury’s Report on the Future of Money and Payments called for a Treasury-led interagency working group to advance work on CBDC. One of the central tasks for the Working Group is to complement the Fed’s work on CBDC policy issues by considering the implications of a US CBDC for policy objectives for which a broader Administration perspective is helpful.
In her remarks, Liang described the approach to thinking about CBDC options, the policy questions being focused on and the kinds of recommendations being developed.
In the coming months, leaders from Treasury, the Federal Reserve, and White House offices, including the Council of Economic Advisors, National Economic Council, National Security Council, and Office of Science and Technology Policy, will begin to meet regularly to discuss a possible CDBC and other payments innovations.
To support these discussions, the CBDC Working Group is developing an initial set of findings and recommendations. These may relate to whether a US CBDC would help to advance the policy objectives described above; the features that a US CBDC would need to advance these objectives; options for resolving CBDC design trade-offs; and areas where additional technological R&D would be useful.
Full consideration of these issues for a possible CBDC – wholesale, retail, or both – will take some time to complete, but the Working Group plans to provide interim public updates. Also, as recommended in the Future of Money and Payments report, the Federal Reserve is encouraged to provide periodic public updates as it continues its research and technical experimentation on CBDCs.