This posting in Forbes relates to the long awaited positioning paper from the Fed on CBDCs, expected a few months ago. We have been commenting on the various efforts underway across the globe with reference to CBDCs, including the notable absence of specific positioning on the topic from the Fed. We don’t know if the article’s author has inside information, but it is mentioned that this research paper (based on the Boston Fed’s work with MIT) may be coming out any day now. In any event, the topic is legislation introduced last week by Congressman Tom Emmer (R-Minnesota) that would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) directly to individuals, which would in effect make the Fed a retail bank.
‘In his press release, Emmer noted that “to maintain the dollar’s status as the world’s reserve currency in a digital age, it is important that the United States lead with a posture that prioritizes innovation and does not aim to compete with the private sector.” Emmer deserves high praise for taking such a principled stand for the private sector over further government centralization and control…
He clearly understands what’s at stake with a CBDC, and Americans can only hope that many other members of Congress share his sympathies. With any luck, the Federal Reserve researchers working on the Fed’s upcoming CBDC report – one that could be released any day now – are paying very close attention.’
The author goes on to discuss various forms or models for usage of a CBDC, maintaining that any version that interjects the Fed into individual financial privacy or competitive relationships with commercial banks should not be considered, therefore agreeing with the tenets of the legislation (which we have not reviewed in any detail). The piece is worth reading and of course we will continue to track this provocative subject.
‘It is doubtful that the Fed will soon surrender its role in providing money to the public, leaving payments systems entirely to the private sector, no matter how beneficial such a move might be to millions of ordinary Americans. But that’s just another reason to enact policies such as those in Rep. Emmer’s bill.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
