ICYMI: New Fed paper hints that a US CBDC could compete with ‘private digital money’
The Federal Reserve dropped a new central bank digital currency white paper on Thursday.
One area of particular note, in the section on potential CBDC benefits, offers some interesting clues as to a potential motivation for a CBDC issuance: the rise and spread of private digital money. The Fed states that a CBDC “would offer the general public broad access to digital money that is free from credit risk and liquidity risk. As such, it could provide a safe foundation for private-sector innovations to meet current and future needs and demands for payment services.”
Additionally, per the Fed paper, a CBDC could “help to level the playing field in payment innovation for private sector firms of all sizes.”