U.S. policymakers are evaluating the merits of a U.S. central bank digital currency and will ramp up discussions in the coming months, a senior Treasury official said.
A CBDC — a digital form of legal tender — could present opportunities to build a more efficient, competitive and inclusive U.S. payment system, but U.S. officials are weighing a variety of issues in determining whether a CBDC is in the national interest, said Nellie Liang, Treasury's undersecretary for domestic finance, during a speech Wednesday at the think tank Atlantic Council.
One concern is that a retail CBDC could be vulnerable to runs which could then destabilize private sector lending during stress periods, Ms. Liang said.
The Federal Reserve released a report in January 2022 detailing the pros and cons of establishing a CBDC but has not indicated a preferred policy outcome. The Fed said in the report that it does not intend to proceed with issuance of a CBDC without "clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law."
As policy deliberations continue, the Fed is conducting technology research and experimentation to inform design choices if a decision is reached to proceed with a CBDC, Ms. Liang said.
She noted that Treasury is leading an interagency CBDC working group to support the Fed and develop recommendations related to policy objectives for which a broader administration perspective is helpful: global financial leadership, national security and privacy, illicit finance and inclusion.
Leaders from Treasury, the Fed and White House offices, including the Council of Economic Advisors, National Economic Council, National Security Council, and Office of Science and Technology Policy, will begin to meet regularly in the coming months to discuss a possible CDBC and other payments innovations, Ms. Liang said.
