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Seeking Alpha 2022-01-20 19:39:38

Federal Reserve releases CBDC discussion paper, but makes no recommendations

The Federal Reserve's long-awaited paper discussing the pros and cons of a potential U.S. central bank digital currency (CBDC) doesn't take a stance on any specific policy. "We look forward to engaging with the public, elected representatives, and a broad range of stakeholders as we examine the positives and negatives of a central bank digital currency in the United States," Fed Chair Jerome Powell said in a statement. The paper points out that a CBDC would be a liability of a central bank like the Fed, whereas forms of money already used in digital transactions are liabilities of private entities. Some advantages of a CBDC would be faster payment options between countries and it would provide a safe, digital payment option for households. A challenge to implementing a CBDC would be how to ensure a CBDC would preserve monetary and financial stability as well as complement existing means of payment.

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