U.S. Central Bank Digital Currency
Governor Michelle W. Bowman of the Federal Reserve Board gave a keynote speech today on the considerations for a central bank digital currency (CBDC).
Highlights
Technological innovation has changed this landscape in recent years, as we have seen the emergence of new financial services entrants offering payments services, new platforms designed to increase the speed of payments, clearing, and settlement, and new forms of digital money.
Over the past several years, and as a direct result of these developments, we have seen a significant increase in attention on central bank digital currencies (CBDCs) from central banks around the world.
There are two threshold questions that a policymaker needs to ask before any decision to move forward with a CBDC.
š First, what problem is the policymaker trying to solve, and is a CBDC a potential solution?
š Second, what features and considerations--including unintended consequences--may a policymaker want to consider in deciding to design and adopt a CBDC?
As the evolution of money and payments continues, it is important for the Federal Reserve to continue looking ahead to anticipate potential changes to money and payments well into the future. With this in mind, our consideration of other potential innovations to money and payments, including a potential U.S. CBDC, must be viewed through the lens of whether and how the payment system would be improved beyond what instant payment services will achieve.
Future decisions about the implementation of technology innovations in money and payments, including a potential U.S. CBDC, must be informed by a deep and thorough understanding of potential intended and unintended consequences, as well as understanding whether a CBDC would be the most effective and efficient means to improve the payment system and address identified problems.
The Federal Reserve has continued its independent research and technical experimentation on digital innovations, including digital assets and CBDC. Specific to CBDC, the Federal Reserve established a program of work that aims to (1) carry out policy analysis to provide perspectives on issues articulated in the Board's January 2022 discussion paper; (2) conduct technology research and experimentation to inform potential CBDC designs; and (3) invest in engagement with the public, industry, academia, and the public sector to bring along stakeholders and obtain needed expertise.
It is important that the Federal Reserve is a part of the ongoing conversations around CBDCs, whether or not a CBDC is ultimately created in the United States. As the Federal Reserve continues to monitor developments in other jurisdictions, the Fed will work closely with international counterparts on payments innovation, CBDC, and other related topics. This includes work with multilateral institutions such as the BIS, the G7, and the Financial Stability Board, as well as bilateral engagements with other central banks.
https://www.federalreserve.gov/newsevents/speech/bowman20230418a.htm