The Fed is America’s central bank, paramount financial-system regulator, and a payments operator. It’s studying and socializing developing a general-purpose central bank digital currency (CBDC). As a general proposition the Fed and government shouldn’t undertake payment activities unless there’s a significant problem that the private sector is unable to adequately address. There is, however, no compelling need a Fed CBDC would address. And, if there’s demand, private-sector banks and payment systems are more than capable of providing digital dollars.
The U.S. payments system is already highly efficient and the most competitive and innovative in the world. Banks transact in central-bank money. Federal Reserve notes (cash) too are central-bank money – Fed liabilities. But American consumers and businesses rely primarily on electronic commercial-bank money.
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