The Federal Reserve’s Discussion Paper on Central Bank Digital Currencies: Seven Things To Know

The Board of Governors of the Federal Reserve System (the “Federal Reserve”) released an important discussion paper on January 20, 2022 entitled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” (the “Discussion Paper”). The Discussion Paper examines the advantages and disadvantages of a potential U.S. central bank digital currency, or “CBDC”. Although the Discussion Paper carefully avoids any commitment by the Federal Reserve to future development and issuance of a CBDC, it nonetheless identifies a number of key benefits that a CBDC could offer and provides a clear sense of how the Federal Reserve might approach key policy choices associated with developing a CBDC, should it decide to move forward. The Discussion Paper also seeks comment from the public on a number of related questions; comments are due by May 20, 2022.