U.S. Treasury-Led CBDC Task Force Reviewing Technical Issues and National Interest

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The United States Department of Treasury continues to review design decisions related to the introduction of a central bank digital currency. Home Finance Undersecretary Nellie Liang gave the Atlantic Council hearing on March 1 an overview of the technical and policy issues that the Treasury-led CBDC working group is examining.

Liang looked at wholesale and retail CBDCs (wCBDC and rCBDC), saying wCBDC raises more technical issues, whereas an rCBDC involves access issues. In particular, she mentioned that “institutions not currently eligible for central bank accounts” could be granted access to a wCBDC.

A wCBDC could also be used for token interbank settlements or securities transactions, Liang said. It could also support stablecoins:

“A wholesale CBDC could also be used as a supporting asset for stablecoins, which could facilitate the transfer of value between stablecoins, in addition to supporting greater interoperability and choice.”

Liang reiterated the Federal Reserve Board’s position that an intermediated rCBDC would serve the best interests of the country and said determining the range of intermediaries for an rCBDC is a major political issue. An rCBDC could improve financial inclusion, she said. The United States currently has the largest unbanked population in the G7, she added.

Liang doubted that a US CBDC would help underpin the role of the dollar internationally:

“In my view, the global demand for dollars stems from structural factors – such as our adherence to the rule of law, the strength of our economy, and the depth, breadth and openness of U.S. financial markets.”

In this, she echoed sentiments expressed by Fed Governor Christopher Waller last year.

Related: US Lagging On CBDCs Could Mean ‘Problem’ – Crypto Council Policy Officer

Liang repeated the already standard warning that the Treasury would not issue CBDCs without congressional support. A CBDC is just one of many options available to “enhance the legacy capabilities of central bank money,” Liang said. She pointed out that the instant payment system FedNow Service is expected to go live this year.