The United States Federal Reserve Board of Governors has released a discussion paper on a potential US central bank digital currency (CBDC) titled “Money and Payments: The US Dollar in the Age of Digital Transformation.”

The comment period for the paper expired on May 20, with the Fed receiving more than 2,000 pages of comments from individuals along with responses from key stakeholders. 

It soon became clear that there were many confidently stated opinions but little agreement among them. The main points in common are in the places where they are perplexed.

As the Fed wants to be known appropriately for its purpose, the Fed paper provides a broad overview of central bank digital currencies and the topics adjacent to central bank digital currencies without much depth.

The discussion begins with the results of previous analyzes that determined that US CBD would yield the best results if it was protected by privacy, Mediterranean, transferable and widely verifiable.
It goes on to consider the potential uses, benefits, and risks of US CBD, with stablecoins and cryptocurrencies briefly mentioned, and 22 questions for discussion.
The paper also looks at current developments in electronic money on the wholesale side, FedNow expected to enable real-time and around-the-clock interbank payments starting in 2023.
Meanwhile, Bank On’s special initiative and other programs seek to increase financial inclusion by promoting low-cost banking services to the unbanked and underserved.
One thing lacking in presentation in the stakeholder comments examined by Cointelegraph is impartiality, with the response from the Institute of International Finance being an exception in this regard. 

The Institute of International Finance is a global financial industry consortium with more than 450 members from more than 70 countries, whose membership includes commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks, and development banks.

The Institute of International Finance answered all 22 questions proposed by the Federal Reserve while remaining unconscious about the advantages of creating a digital currency for the US central bank.

“A decision like this deserved serious consideration, so IIF wanted it to be entirely constructive in its submission to support the Fed’s ability to weigh the pros and cons,” Jessica Rainier, IIF’s managing director of digital finance, told Cointelegraph. 

“The business model needs to work,” said Renee. “If the risks outweigh the incentives, it may only attract intermediaries that rely on selling user data, like tech companies. That’s not good for consumers.”