On March 1, 2023, the US Treasury Undersecretary of Internal Finance, Nellie Liang, gave a speech at the Atlantic Council in Washington on the topic of Central Bank Digital Currencies (CBDCs). Liang emphasized that CBDC is only one of many options available to upgrade the legacy capabilities of central bank money, and that the Biden administration, the Treasury, and the Federal Reserve will begin to meet regularly to discuss the topic.
Nellie Liang from the US Treasury Department Examines the Main Considerations of Developing a CBDC
US Treasury Assistant Secretary for Internal Finance Nellie Liang delivered a speech at the Atlantic Council entitled “Next Steps on the Future of Money and Payments.” During her speech, Liang discussed US President Joe Biden’s executive order urging the government to develop an approach to the digital currency sector. Liang also referred to the collapse of certain cryptocurrency businesses in 2017, noting that “it runs on stablecoins” and the “client and company asset mix”.
“All these calamities reinforce the recommendations made for regulators to vigorously enforce existing laws to protect consumers,” Liang said. He primary focus was on Central Bank Digital Currencies, or CBDCs. He also discussed his beliefs about them, noting that central banks are at the heart of the global monetary system. He noted that the government must decide whether to create a wholesale or retail CBDC, and that CBDCs will provide additional benefits and “three main characteristics”.
“First, a CBDC would be legal tender. Second, a CBDC would be one-for-one convertible into other forms of central bank money: reserve balances or paper money. Third, a CBDC would be cleared and liquidated almost instantly,” Liang said.
The Senior Treasury Representative said that CBDC must address “global financial leadership,” “national security,” “privacy,” “inclusion” and “illicit finance.” According to the US CBDC Task Force, this is how they focus on achieving these goals and identifying trade-offs. Regarding inclusion, he noted that the US has an unbanked population and that a CBDC should be evaluated to see if it can promote banking and “inclusion and equity in financial service delivery.”
Liang concluded his speech by mentioning that members of the US government plan on meeting regularly to discuss CBDCs. He highlighted the fact that 11 countries have already launched digital currencies for central banks, as well as the fact that many other jurisdictions are devoted to research and development of the idea.
“In the coming months, leaders from the offices of the Treasury, the Federal Reserve and the White House, including the Council of Economic Advisers, the National Economic Council, the National Security Council and the Office of Science and Technology Policy, will begin to meet regularly to discuss a possible CBDC and other payment innovations,” Liang said in his closing remarks.
What do you think about the US government’s plans to meet regularly to discuss CBDCs and other payment innovations? Share your views on the topic in the comments below.
