The US Federal Reserve is inching ahead with its CBDC research, promising a discussion paper this summer as it seeks to secure a "better understanding" of the opportunities and risks associated with a digital dollar.
In a short video address, Fed chair Jerome Powell says that the central bank has been investigating CBDCs for several years, focusing on whether and how a digital dollar could improve on an "already safe, effective, dynamic, and efficient US domestic payments system".
Powell stresses that "it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar".
While some countries, most notably China, are forging ahead with their CBDC plans, Powell indicates a more measured approach, saying that this summer's discussion paper is the beginning of a "thoughtful and deliberative process".
"Irrespective of the conclusion we ultimately reach, we expect to play a leading role in developing international standards for CBDCs, engaging actively with central banks in other jurisdictions as well as regulators and supervisors here in the United States throughout that process." says the chair.
Powell is also preparing to turn up the regulatory heat on stablecoins, which may not come with the same protections as traditional means of payment.
As stablecoins' use increases, "so must our attention to the appropriate regulatory and oversight framework. This includes paying attention to private-sector payments innovators who are currently not within the traditional regulatory arrangements applied to banks, investment firms, and other financial intermediaries."