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The Federal Reserve has published its long-anticipated discussion paper on the risks and benefits of a digital dollar and invited public comment – but has studiously avoided giving any hints on its plans.
The paper, first trailed by Fed chair Jerome Powell last May, is the “first step in a discussion of whether and how a CBDC could improve the safe and effective domestic payments system,” says the central bank.
It was supposed to be published last summer but the Fed is determined to take its time on the issue despite some countries, most notably China, forging ahead with their CBDC plans.
The paper rehearses established arguments for and against a digital dollar, including in relation to faster international payments and concerns about privacy and financial stability.
The Fed is now seeking public comment on more than 20 questions, with submissions accepted for 120 days.
While Powell has remained noncommittal on the chances of a digital dollar, others at the Fed have been less circumspect.
In June, supervision chief, Randal Quarles, suggested that CBDCs could be an embarrassing fad, comparable to the parachute pants made famous in the 1980s by rapper MC Hammer.
Then, in August, governor Christopher Waller declared himself “highly sceptical” that there is a compelling need for a digital dollar, adding that its “remains a solution in search of a problem.
Financial Services
