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Fed asks public for feedback on issuing a U.S. central bank digital currency
The Federal Reserve Thursday released a public discussion paper examining the pros and cons of a potential U.S. central bank digital currency (CBDC). Of note, the paper invites comment from the public on the matter, marking the first step in the discussion of whether and how CBDC could potentially improve the safety and effectiveness of the domestic payments system.
In its statement, the Fed noted that a federally issued digital currency should be “privacy-protected, intermediated, widely transferable and identity-verified.” The currency would act similarly to physical cash transactions, allowing a person or business to transfer money directly to someone else without the use of a private bank account, stated the Fed.
Of note, last week, Rep. Tom Emmer, R-Minn., introduced legislation that would restrict how the Federal Reserve could issue its own digital currency. The bill, created in response to privacy and civil liberty concerns, would bar the central bank form issuing digital currencies directly to consumers and prevent unilateral Fed control of a digital currency. NAFCU has previously expressed concerns about whether or not a CBDC would compete with traditional deposits at credit unions.
NAFCU will monitor the Fed’s comment process on this topic closely. The association remains committed to ensuring a level playing field for credit unions in the financial services landscape and will continue to update members of any potential changes that may impact the industry.