The Treasury Department will form an interagency working group to explore the benefits, risks and potential use cases for a central bank digital currency, Undersecretary of Domestic Finance Nellie Liang announced in a speech today. The working group will include representatives from Treasury, the Federal Reserve and White House offices, including the Council of Economic Advisors, National Economic Council, National Security Council and Office of Science and Technology Policy.
The working group “is intended to complement the Fed’s efforts” to understand CBDC, Liang said, noting that the group would consider three main objectives: how a U.S. CBDC could contribute to and sustain U.S. global financial leadership; potential national security risks posed by a CBDC; and the implications for privacy, illicit finance and financial inclusion if a CBDC were to be created.
The working group will develop an initial set of findings and recommendations, which “may relate to whether a U.S. CBDC would help to advance the policy objectives described above; the features that a U.S. CBDC would need to advance these objectives; options for resolving CBDC design trade-offs; and areas where additional technological [research and development]would be useful.”
In a statement following the announcement, American Bankers Association President and CEO Rob Nichols reiterated ABA’s longstanding stance that the risks of a potential CBDC far outweigh any theoretical benefits. As the working group continues to explore these benefits and risks, “we urge the administration and the U.S. Treasury to include private sector input, which was notably absent from the remarks, in the CDBC Working Group,” Nichols said. “Ensuring that consumers, investors and businesses are protected from the potential financial risks posed by digital assets should be a priority for the government, and we believe that can only be achieved through careful coordination with the private sector, including the banking industry.”