• L Misthos and M Bacina

US Federal Reserve releases CBDC insight



The United States Federal Reserve Bank (Fed) has released its insight to a US Central Bank Digital Currency (CBDC). The paper weighs up the positive and negative implications of issuance of a retail a CBDC in the US but doesn't give clear indication of any potential future US policy.


Well known benefits of CBDCs which are outlined in the report include:

  • Providing a safe, digital payment option for households and businesses;

  • Faster and cheaper payment options both domestically and worldwide;

  • Greater access to digital banking for the 7 million US households that remain unbanked;

  • Adapting the US financial sector to keep up with an increasingly digitised industry.

While the report does mention potential drawbacks, such as financial stability risks and privacy protection, the Fed considers major questions such as policy requirements, privacy concerns and combatting illicit finance.


The Fed believes there are significant disruptive opportunities to be had by issuing a CBDC, noting one:

could fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank

As finance becomes more and more digitised with the increasing issuance of cryptocurrencies and other digital assets, a US CBDC allows for a digital token to be issued by a centralised government entity, as opposed to a private commercial actor.


While the report takes no clear position on policy, it indicates an intention to deeply consider the potential of a US backed CBDC to improve transferability and efficiency of payments. With the Chinese CBDC already in release and other countries actively developing CBDCs the US and Australia need to get a move-on.