US Fed seeks answers to 22 questions about the digital dollar

The US Federal Reserve (Fed) has released its digital dollar white paper and is seeking answers to 22 questions related to its central bank digital currency (CBDC) project, from a wide range of stakeholders.

The US central bank said in a report that the Fed will move towards developing a CBDC only if the research "indicates benefits to households, businesses and the wider economy that outweigh downside risks and indicates that CBDC is superior to alternative methods ".

He also added that the Fed will pursue a CBDC only "in the context of broad public and intergovernmental support."

At the same time, the Fed recognizes that a CBDC could potentially offer a wide range of benefits to the US economy. As an example, the bank said its digital currency could provide households and businesses with a convenient form of central bank money, offer entrepreneurs a platform on which to create new financial products and services, and support faster and cheaper payments., including cross-border payments, how to expand consumer access to the financial system.

The digital dollar could also carry some risks, they said, raising questions about how it could affect the market structure of the financial sector, the cost and availability of credit, the security and stability of the financial system, and the effectiveness of monetary policy. bank.

The Fed said it welcomed comments submitted by all interested parties on the shared list of questions. It also intends to "conduct targeted awareness and convene public forums to promote a broad dialogue on CBDC".

The central bank is awaiting answers to your questions by 20 May and interested parties can submit their feedback via the form available. It is not mandatory to answer all included questions and answers are limited to 5,000 characters per question.

The module includes questions about the potential benefits, political considerations and risks related to the CBDC project, its impact on financial inclusion, the Fed's monetary policy, consumer privacy, US financial stability, its influence on the financial sector, its wider international impact, and the desired CBDC design, among others.

Fed question list

CBDC Benefits, Risks, and Policy Considerations

1. What additional potential benefits, political considerations or risks of a CBDC might exist that have not been raised in this document?

2. Could some or all of the potential benefits of a CBDC be better achieved in a different way?

3. Could a CBDC influence financial inclusion? Would the net effect be positive or negative for inclusion?

4. How could a US CBDC affect the Federal Reserve's ability to effectively implement monetary policy in pursuit of its goals of maximum employment and price stability?

5. How could a CBDC affect financial stability? Would the net effect be positive or negative for stability?

6. Could a CBDC adversely affect the financial sector? How could a CBDC affect the financial sector differently than stablecoins or other non-bank money?

7. What tools could be considered to mitigate any negative impact of CBDC on the financial sector? Would some of these tools diminish the potential benefits of a CBDC?

8. If the use of cash decreases, is it important to preserve public access to a form of central bank money that can be widely used for payments?

9. How could domestic and cross-border digital payments evolve in the absence of a US CBDC?

10. How should the decisions of other large-economy nations to issue CBDCs influence the decision whether the United States should do so?

11. Are there any other ways to manage the potential risks associated with CBDC that have not been raised in this document?

12. How could a CBDC provide privacy to consumers without providing complete anonymity and facilitating illicit financial activity?

13. How could a CBDC be designed to promote operational and cyber resilience? What operational or IT risks might be unavoidable?

14. Should a CBDC be legal tender?

CBDC design

1. Should a CBDC pay interest? If so, why and how? If not, why not?

2. Should the amount of CBDC held by an individual end user be subject to quantitative limits?

3. What types of companies should act as intermediaries for CBDCs? What should be the role and regulatory structure of these intermediaries?

4. Should a CBDC have “offline” capabilities? If so, how could it be achieved?

5. Should a CBDC have “offline” capabilities? If so, how could it be achieved?

6. How could a CBDC be designed to achieve portability across multiple payment platforms? Would new technologies or technical standards be needed?

7. How could future technological innovations influence design and policy choices related to CBDC?

8. Are there any additional design principles that should be considered? Are there trade-offs around any of the identified design principles, especially in an attempt to reap the potential benefits of a CBDC?

The United States has a long history of struggling and reflecting on its CBDC. For example, in 2020, the Democratic Party shared two lengthy bills containing the term "digital dollar," defined in a similar way. But very soon, reports appeared that the "digital dollar" was removed from the following version of an account.

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