The Treasury statement explores the potential form and implementation of America’s CBDC.
The US Department of the Treasury has released comments from Undersecretary for Domestic Finance Nellie Liang on “Next Steps for the Future of Money and Payments,” for CBDCs and the approach the American government is taking to their potential implementation.
The original Treasury report released in September 2022 outlined the formation of a CBDC working group that would progress work on CBDC. Liang’s statement confirmed the formation of the group.
“One of the main tasks for the CBDC Working Group is to complement the work of the Fed by considering the implications of the US CBDC for policy purposes that can help the Administration’s broader perspective,” Liang said. “To give you an understanding of how we’re going to pursue this work, I’ll describe our approach to thinking about CBDC options, the policy questions we want to answer, and the types of recommendations we’ll develop.”
Highlights of this briefing include a look at the potential that CBDCs can do, the potential for separate retail and wholesale CBDCs and possible core features of CBDCs. Also discussed is the idea that “a potential US CBDC, if created, would best serve the United States through ‘intermediation,’ meaning that the private sector would offer digital accounts or wallets to facilitate the management of CBDC ownership and payments. In terms of technology, retail CBDCs may has a different architecture compared to CBDCs intended for wholesale use only.
In a piece for Bitcoin Magazine, Mark Goodwin explained how Bitcoiners can “spend so much time looking for CBDCs, we miss the private stablecoin monster right in front of our eyes.”
Comments released by the Treasury indicate that CBDCs may be behind private entities, with a major incentive to participate. The United States is already serious about considering CBDC. And all of this comes as legislation introduced by Republican lawmakers would “prohibit the Federal Reserve from issuing CBDC directly to anyone.”
Although this bill may not have much of a chance to pass, it is noted that a certain width prevents the Federal CBDC, potentially leaving free that “intermediate” by private parties.
The note also illustrates how CBDC is one of the directions the government should take, the other being a real-time payment system. The Federal Reserve, according to Liang, “has indicated that it expects to launch the FedNow Service this year, which will be designed to allow rapid retail payments on a 24x7x365 basis, using an existing form of central bank money (ie, central bank reserves) as an interbank settlement asset.” .
It will differ from CBDC as it will use existing forms of central bank money instead of the new form that CBDC will introduce, in addition to potential new payment rails.
Regardless of the path that the Treasury takes, a new payment system is apparently on the horizon for the United States.