The Treasury statements explore the possible forms and implementations of a US CBDC.
The US Treasury Department has released Under Secretary for National Finance Nellie Liang’s comments on “Next Steps Towards the Future of Money and Payments”, addressing CBDCs and the approach being taken by the US government. for its possible implementation.
the original treasure report published in September 2022 described the formation of a CBDC working group that would advance work on a CBDC. Liang’s comments confirmed the formation of that group.
“One of the central tasks of the CBDC Task Force is to complement the work of the Fed in considering the implications of a US CBDC for policy objectives for which a broader perspective from the Administration is useful,” Liang said. “To give you an idea of how we are carrying out this work, I will describe our approach to thinking about CBDC options, the policy questions we are trying to answer, and the types of recommendations we hope to develop.”
Highlights of this overview include a look at the possible forms a CBDC could take, the potential of a separate retail and wholesale CBDC, and the possible main features of the CBDC. Also discussed is the idea that a “potential US CBDC, if one were to be created, would best serve the United States by being ‘brokered’, meaning that the private sector would offer digital accounts or wallets to facilitate the management of CBDC holdings and payments. In terms of technology, a retail CBDC might involve a different architecture compared to a CBDC that is intended for wholesale use only.”
In his article for Bitcoin Magazine, Mark Goodwin described how bitcoiners may have “spent so much time searching for CBDCs that we missed the private entity stablecoin monster right in front of our eyes.”
Comments released by the Treasury suggest that a CBDC may well come at the expense of private entities, with strong incentives to participate. The United States has gotten serious about its consideration of a CBDC. And all this just as Republican lawmakers have introduced legislation 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, the specific angle of avoiding a federal CBDC, which could leave those “brokered in” by private parties, is notable.
The comments also described how a CBDC is one of many directions for the government to take, another being real-time payment systems. The Federal Reserve, according to Liang, “has indicated that it hopes to launch the FedNow Service this year, which will be designed to enable near-instantaneous 24/7/365 retail payments using a form existing central bank money (ie 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 that a CBDC would introduce, plus a potential new set of payment rails.
Regardless of which path the Treasury takes, new payment systems appear to be on the horizon for the United States.
