US Treasury Department building, with seal near one entrance. Photo: ShutterstockThe U.S. Treasury Department is still considering different aspects related to the introduction of a digital currency controlled by the central bank. Nellie Liang, the Under Secretary for Domestic Finance, discussed technical and policy concerns during a presentation at the Atlantic Council on March 1. The Treasury's CBDC Working Group is studying both wholesale and retail CBDCs, with wCBDC raising more technical issues, while rCBDC involves accessibility problems. Liang stated that a wCBDC could provide access to institutions that do not currently qualify for central bank accounts.Liang further said that a wholesale CBDC could be utilised for tokenized interbank settlements or securities transactions. Moreover, it has the potential to support stablecoins, which can simplify the process of transferring value among stablecoins and promote increased interoperability and flexibility. In particular, a wholesale CBDC could serve as a backing asset for stablecoins.Liang restated that the Federal Reserve Board believes an intermediated retail central bank digital currency (rCBDC) would be the most beneficial for the country. She also noted that identifying the appropriate intermediaries for an rCBDC is a crucial policy issue. According to Liang, an rCBDC has the potential to improve financial inclusion, which is crucial given that the United States has the largest unbanked population among the G7 countries.Liang expressed scepticism that a U.S. central bank digital currency would strengthen the global role of the dollar. She believes that the demand for the dollar globally is due to inherent structural factors such as the robustness of the American economy, the openness and expansiveness of the U.S. financial markets, and the country's adherence to the rule of law. This aligns with the views expressed by Fed governor Christopher Waller in the previous year.Liang reiterated that the Treasury would not introduce a central bank digital currency without approval from Congress. She emphasised that a CBDC is only among several alternatives to modernise the current capabilities of central bank money. Liang also mentioned the FedNow Service, an instant payment system that is expected to commence operation this year.Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
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