The U.S. Federal Reserve Lags Behind Peers in Developing CBDC

The Federal Reserve's Lag in CBDC Development

According to a recent blog post by the Atlantic Council, the U.S. Federal Reserve is falling behind its peers in the development of a central bank digital currency (CBDC). The post highlights the lack of resources and manpower dedicated to CBDC development and innovation within the Federal Reserve.

Comparison with the Bank of China

The authors of the blog post, Josh Lipsky and Ananya Kumar, point out that the Bank of China has over 300 people working on its CBDC, while the Federal Reserve has only a team of twenty individuals working on a digital alternative to the dollar. This stark difference in manpower reflects the Federal Reserve's lag in CBDC development.

Delayed Fednow System

In addition to the lack of resources, the Federal Reserve's Fednow system, which is its interbank settlement system, has taken longer to launch compared to similar systems in Europe. The early adoption of Fednow has also been limited. These delays further contribute to the Federal Reserve's lag in CBDC development.

The Belief in Dollar's Lack of Need for Innovation

One of the reasons behind the Federal Reserve's lag in CBDC development is the belief among officials and politicians that the dollar does not need to innovate. This belief stems from the fear of disrupting the currency that underpins the global economy. However, the authors argue that this belief is a miscalculation and that innovation is necessary for the dollar's future.

Opposition to CBDC

Not only do Federal Reserve officials and Capitol Hill politicians express opposition to the CBDC, but former U.S. President Donald Trump has also vowed to block its creation if reelected. However, the Atlantic Council blog post emphasizes that payment innovation does not have to wait until after the November election.

Comparison with Central Banks in Centralized Countries

Franklin Knoll, an expert at the Federal Reserve Bank of Kansas City, questions the comparison made in the blog post between the U.S. Federal Reserve and central banks in centralized countries like Japan or the U.K. Knoll argues that central banks in these countries have more independence and agility, allowing them to move faster in monetary matters. The Federal Reserve, on the other hand, is a decentralized collection of public/private banks spread across the country.

Impact of U.S. Community Banks

Noll also suggests that the blog post overlooks the resistance of U.S. community banks to the digital currency. Their opposition may contribute to the perceived opposition of U.S. politicians to the CBDC.

In conclusion, the U.S. Federal Reserve is lagging behind its peers in the development of a CBDC. The lack of resources, delays in launching the Fednow system, and the belief in the dollar's lack of need for innovation contribute to this lag. However, the blog post argues that innovation is crucial for the future of the dollar and that payment innovation can occur before the November election. The comparison with central banks in centralized countries and the impact of U.S. community banks should also be taken into account when assessing the Federal Reserve's position on CBDC.

Frequently Asked Questions

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What precious metal would your investment preference be?

What precious metals can you invest in for retirement?

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To protect yourself from inflation, investing in physical metals is the best option. This is because you not only get the current price but also the future value when you invest precious metals. So as prices rise, so does the value of your investment.

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Statistics

Depending on your financial situation, most experts recommend you invest no more than 5% to 10% of your retirement funds in precious metals. (forbes.com)
Silver must be 99.9% pure • (forbes.com)
The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. (monex.com)
You can only purchase gold bars of at least 99.5% purity. (forbes.com)

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How To

How to buy gold for your Gold IRA

A term that describes precious metals is gold, silver and palladium. It's any element naturally occurring with atomic numbers 79 to 110 (excluding helium), that is valued for its rarity or beauty. Precious metals that are most commonly used include silver and gold. Precious metals are often used as money, jewelry, industrial goods, and art objects.

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A gold contract could be purchased if you wanted to speculate on the future price of gold. My position after the contract expires will be either “long” (or “short”) A long contract is one in which I believe that the price of gold will rise. I'm willing now to pay someone else money, but I promise I'll get more money at the end. A short contract, on the other hand, means I believe the price of gold is going to drop. In exchange for making less money in the future, I am willing to accept the money now.

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Precious Metals are great investments as they are difficult to counterfeit. While paper currencies can be easily counterfeited by printing new bills, precious metals cannot. It is because precious metals are hardier than paper currencies that they can be counterfeited by printing new bills.

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By: Terence Zimwara
Title: The U.S. Federal Reserve Lags Behind Peers in Developing CBDC
Sourced From: news.bitcoin.com/atlantic-council-belief-that-dollar-does-not-need-to-innovate-is-a-miscalculation/
Published Date: Mon, 29 Jan 2024 07:00:28 +0000