This article comes fromThe Blocksecondary title

Odaily Translator | Nian Yin Si Tang

Summary:

Summary:

- On Thursday, the Federal Reserve released a new white paper on central bank digital currencies.

- While the white paper largely sidesteps the topic of cryptocurrencies, it suggests that a US CBDC could compete with "private digital currencies."

The long-awaited U.S. central bank digital currency (CBDC) document came out on Thursday, as Federal Reserve Chairman Jerome Powell said earlier.This 40-page report

Represents a key step toward a possible future launch of a digital dollar — although the authors stress at the outset that the document’s existence does not herald any explicit policy action by the Fed and that it is intended to be a The beginning of a conversation.

Nonetheless, it does provide a window into the Fed’s existing thought process regarding a potential digital dollar, and any contributions Fed officials may have as it relates to global policy and actions involving CBDCs.

In the section on the potential benefits of CBDCs, one area of ​​particular note provides some interesting clues as to the potential motivations for the issuance of CBDCs: the rise and spread of private digital currencies.

At first glance, the report doesn’t seem to suggest much about digital assets and cryptocurrencies, other than to reiterate past calls for Congress to more strictly regulate stablecoins.

However, on pages 14 and 15 of the report, it cites a "proliferation of private digital currencies" in a "rapidly digitizing economy" and explores the role CBDCs may play in this environment.

The Fed stated that a CBDC “will provide the public with broad access to digital currency without credit risk and liquidity risk.” As such, it could provide a secure foundation for private sector innovation to meet current and future demand for payment services. demand. "

The authors then postulate that "all private digital currency options, including stablecoins and other cryptocurrencies, require mechanisms to mitigate liquidity risk and credit risk," explaining:

“But none of these mechanisms are perfect. In our rapidly digitizing economy, the proliferation of private digital currencies could pose risks to individual users and the financial system as a whole. A US CBDC could mitigate some of these risks while supporting private sector innovation. "

Furthermore, according to the Fed report, a CBDC “helps create a level playing field for payments innovation” by private businesses of all sizes.

In the view of the Fed, small companies may not be able to issue their own private currencies. A U.S. CBDC “could overcome this hurdle, allowing private-sector innovators to focus on new access services, distribution methods, and related services.”

The Fed also raised the role of a CBDC for micropayments, which has long been seen as a use case for digital assets.

“For example, as noted above, a CBDC could be programmed to deliver payments at specific times,” the report explained. “Furthermore, a CBDC could be used to conduct micropayments—small financial transactions that typically occur online, where traditional payment The system is not necessarily designed to facilitate micropayments.”

andPayPalandMasterCardMasterCard