WASHINGTON–Fed Chairman Jerome Powell has released a new video in which he said the Federal Reserve is studying technological advances in the global payments landscape and exploring ways that it might refine its role as a core payment services provider and as the issuing authority for U.S. currency.
"As the central bank of the United States, the Federal Reserve is charged with promoting monetary and financial stability and the safety and efficiency of the payment system," said Powell. "In pursuit of these core functions we have been carefully monitoring and adapting to the technological innovations now transforming the world of payments, finance, and banking."
According to the Fed, the technology also offers new possibilities to central banks, and it enables the development and issuance of central bank digital currencies, or CBDCs. The Fed explained a CBDC is a new type of central bank liability issued in digital form. While various structures and technologies might be used, a CBDC could be designed for use by the general public, the Fed added.
Not a Cash ‘Replacement’
The Federal Reserve said that as it explores the potential benefits and risks of CBDCs, the key focus is on whether and how a CBDC could improve on an already safe, effective, dynamic, and efficient U.S. domestic payments system in its ability to serve the needs of households and businesses.
"We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks," Powell said. "The design of a CBDC would raise important monetary policy, financial stability, consumer protection, legal, and privacy considerations and will require careful thought and analysis—including input from the public and elected officials."
Discussion Paper
Powell announced the Federal Reserve plans to publish this summer a discussion paper that will explore the implications of fast-evolving technology for digital payments, with a particular focus on the possibility of issuing a U.S. central bank digital currency.
The paper will complement Federal Reserve System research that is already underway.
The video message can be found at www.federalreserve.gov.
"As the central bank of the United States, the Federal Reserve is charged with promoting monetary and financial stability and the safety and efficiency of the payment system," said Powell. "In pursuit of these core functions we have been carefully monitoring and adapting to the technological innovations now transforming the world of payments, finance, and banking."
According to the Fed, the technology also offers new possibilities to central banks, and it enables the development and issuance of central bank digital currencies, or CBDCs. The Fed explained a CBDC is a new type of central bank liability issued in digital form. While various structures and technologies might be used, a CBDC could be designed for use by the general public, the Fed added.
Not a Cash ‘Replacement’
The Federal Reserve said that as it explores the potential benefits and risks of CBDCs, the key focus is on whether and how a CBDC could improve on an already safe, effective, dynamic, and efficient U.S. domestic payments system in its ability to serve the needs of households and businesses.
"We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks," Powell said. "The design of a CBDC would raise important monetary policy, financial stability, consumer protection, legal, and privacy considerations and will require careful thought and analysis—including input from the public and elected officials."
Discussion Paper
Powell announced the Federal Reserve plans to publish this summer a discussion paper that will explore the implications of fast-evolving technology for digital payments, with a particular focus on the possibility of issuing a U.S. central bank digital currency.
The paper will complement Federal Reserve System research that is already underway.
The video message can be found at www.federalreserve.gov.
CUToday.info
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