The report—teased by Fed officials for nearly a year—says it won't issue a CBDC without 'clear support' from Biden and Congress.
, the Fed said a CBDC, which effectively combines the efficiency of cryptocurrency transactions with the safeguards of a central-bank-backed asset, could "fundamentally change" the structure of the nation's financial system by altering the roles of the central bank and the private sector.
The report, authored by the Fed's seven-member board of governors, states a widely available CBDC would serve as a"near-perfect" substitute for commercial bank money, so much that its implementation could reduce the amount of deposits in the banking industry—cash banks rely on to fund loans. The authors then write that the design choices of a CBDC could help mitigate such concerns, pointing out a CBDC that bears no interest would help dissuade consumers from cashing out their deposits in favor of digital dollars.
Rather than coming to a conclusion on the launch of a Fed-backed CBDC, officials said they take"no position on the ultimate desirability of a U.S. CBDC" and instead called the report a"first step" in the decision-making process; thus far, China is the only major economy actively trialing a CBDC. The Fed is seeking public comments on the matter for a period of 120 days, but it stopped short of outlining any potential action thereafter, save for noting the Fed"does not intend" to issue a CBDC without"clear support" from the executive branch and Congress—"ideally in the form of a specific authorizing law."
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