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Should the United States Issue a Central Bank Digital Currency? Lessons from Abroad

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  • Charles M. Kahn

Abstract

If the web 3.0 requires a public ledger–based payments platform, central bank digital currency (CBDC) is unlikely to provide the digital currency needed to fuel the smart contracts of tomorrow. This payments dilemma can be solved by a hybrid digital currency that includes a new type of bank deposit as well as regulated private stablecoins, both of which clear and settle on a next-generation public ledger created and managed as a joint venture between banks and private stablecoin issuers. With this payments platform under Federal Reserve oversight, there would be no need for the Federal Reserve to issue CBDC.

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  • Charles M. Kahn, 2022. "Should the United States Issue a Central Bank Digital Currency? Lessons from Abroad," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2022(8), June.
    • Handle: RePEc:fip:a00068:96685
    DOI: 10.29338/ph2022-08
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    References listed on IDEAS

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    1. Aleksander Berentsen & Fabian Schär, 2018. "The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies," Review, Federal Reserve Bank of St. Louis, vol. 100(2), pages 97-106.
    2. Raphael A. Auer & Giulio Cornelli & Jon Frost, 2020. "Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies," CESifo Working Paper Series 8655, CESifo.
    3. Ruchir Agarwal & Miles Kimball, 2015. "Breaking Through the Zero Lower Bound," IMF Working Papers 2015/224, International Monetary Fund.
    4. Kenneth S. Rogoff, 2016. "The Curse of Cash," Economics Books, Princeton University Press, edition 1, number 10798.
    5. Anneke Kosse & Ilaria Mattei, 2022. "Gaining momentum – Results of the 2021 BIS survey on central bank digital currencies," BIS Papers, Bank for International Settlements, number 125, July.
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    Keywords

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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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