The Federal Reserve has released a much-awaited paper on the potential for a U.S. central bank digital currency (CBDC). The paper examines the "pros and cons" of a CBDC, which the Federal Reserve regards as "potentially serv[ing] as a new foundation for the payment system and a bridge between different payment services, both legacy and new." The Federal Reserve is seeking input, due May 20, 2022, from "all stakeholders" on nearly two dozen questions relating to CBDC design and a range of important policy concerns.
The Federal Reserve will only take further steps toward developing a CBDC if research points to benefits for households, businesses, and the economy overall that exceed the downside risks, and indicates that CBDC is superior to alternative methods. Furthermore, the Federal Reserve would only pursue a CBDC in the context of broad public and cross-governmental support.