The Federal Reserve has finally issued the long-awaited CBDC white paper that contains some very interesting conclusions.
Fed White Paper Reveals the Agency is Taking No Sides
Fed’s report on the CBDC meant to drop last summer is released. The report is framed as a discussion paper, presenting the pros and cons of the digital coin and inviting public comment on the same.
In the beginning, the Fed clarifies that “the paper is not intended to advance any specific policy outcome, nor is it intended to signal that the Federal Reserve will make any imminent decisions concerning the CBDC.”
According to the Fed, issuing a central bank digital currency (CBDC) will offer Americans more fast payment options. But, CBDCs will also bolster the current financial system present stability risks and privacy concerns. However, the risks are present if the CBDC operates within the network of private banks. It would be safe if the Fed issued the CBDC directly to consumers.
While the paper presented this two-way outcome, it did not make clear policy recommendations. Readers still cannot certainly conclude if the Fed is launching a CBDC. The central bank only said that without clear support from the executive branch, or a specific authorizing law from Congress, there would be no further action regarding CBDCs.
Fed Chair Jerome Powell May Have Hinted on White Paper Content
The Fed white paper on CBDC has more or less exposed how the agency is undecided. The Federal Reserve admits that it requires broad public and government support with the CBDC. Furthermore, the Fed report on CBDC lists 22 questions for feedback from stakeholders.
When Congress questioned fed Chair Jerome Powell during his confirmation hearing, he alluded to the contents of this Fed’s report on the CBDC. Powell stated that the report would lean towards it being an exercise in asking questions and seeking input. He added that it would not be about taking positions on the various issues.
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