Treasury statements explore potential forms and implementations of a US CBDC.
The U.S. Treasury Department released Under Secretary of Home Finance Nellie Liang’s comments on “Next Steps Towards the Future of Money and Payments,” discussing CBDCs and the approach the U.S. government is taking. for their potential implementation.
“One of the central tasks of the CBDC Task Force is to complement the work of the Fed by examining the implications of a U.S. CBDC for policy objectives for which a broader perspective from the administration is useful,” said Liang said. “To give you an idea of how we are pursuing this work, I will outline our approach to thinking about CBDC options, the policy questions we are trying to answer, and the kinds of recommendations we hope to develop.”
Highlights of this description include an overview of the potential forms a CBDC could take, the potential for a separate retail and wholesale CBDC, and possible basic characteristics of the CBDC. There is also discussion of the idea that a “potential US CBDC, if created, would better serve the United States by being a ‘middleman,’ meaning the private sector would offer digital accounts or wallets to facilitate management. CBDC holdings and payments. In terms of technology, a retail CBDC may involve a different architecture than a CBDC intended for wholesale use only.
In his article for Bitcoin Magazine, Mark Goodwin described how Bitcoiners may have “spent so much time looking for CBDCs, we missed the private entity stablecoin behemoth right before our eyes.”
Remarks released by the Treasury suggest that a CBDC could well come on the backs of private entities, with major incentives to participate. The United States has gotten serious about its consideration of a CBDC. And all this just as legislation was introduced by Republican lawmakers that would “prohibit the Federal Reserve from issuing a CBDC directly to anyone.”
While this bill may not have much of a chance of passing, noteworthy is the specific angle of preventing a federal CBDC, potentially leaving free those who are “mediated” by private parties.
The remarks also described how a CBDC is one of many directions the government needs to take, another being real-time payment systems. The Federal Reserve, according to Liang, “has indicated that it plans to launch the FedNow service this year, which will be designed to enable near-instantaneous retail payments on a 24x7x365 basis, using an existing form of central bank money (c i.e., central bank reserves) as an interbank settlement asset.
This would differ from a CBDC in that it would use an existing form of central bank money versus the new form a CBDC would introduce, in addition to a potential new set of payment rails.
Whichever path the Treasury takes, new payment systems are apparently on the horizon for the United States.