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  • Writer's pictureDeborah

On January 20, the Federal Reserve Board released the paper, Money and Payments: The U.S. Dollar in the Age of Digital Transformation”, which presents the pros and cons of a potential U.S. central bank digital currency, focusing on the uses of CBDC, potential benefits and risks and any related policy considerations.


Generally, favourable characteristics of a CBDC system would include:

  • Privacy-protected

  • Intermediated

  • Transferable

  • Identity-verified

  • Transactions that are final and completed in real time

The paper discusses the benefits of a CBDC which include safely meeting future needs and demands for payment services, improving cross-border payments, supporting the U.S. dollar’s international role, promoting financial inclusion and extending public access to a safe central bank money.


On the other hand, potential risks include changing the financial-sector market structure, impacting the safety and stability of the financial system, and affecting the efficacy of monetary policy implementation. In addition, there are important considerations for privacy, data protection and requirements to prevent financial crimes. Moreover, CBDC would also need to be designed to mitigate operational disruptions and cyber security risks. As such securing CBDC and ensuring resilience of its systems remain a key policy consideration.


Public comments are requested until May 20 and can be made here.


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