The digital payments company PayPal was supportive of the Fed’s consideration of a CBDC and said that the U.S. payments network would be the only way to ensure that there was broad adoption of a CBDC, if the Fed does pursue the concept. Indeed, Mastercard contended that linking to the existing U.S. “While a CBDC could play a role in payments innovation, increased financial inclusion, visibility into economic activity, and improved efficiency of national and international payment flows, all of these potential benefits can also be achieved through facilitation of a vibrant private sector and competition in payments,” Mastercard said. The Purchase, New York-based company also noted that private companies in the existing system can accommodate the current trend in which cash use is declining and address other issues, such as the need for improvements in cross-border payments options. Ultimately, Mastercard cast doubt on the country’s need for a digital dollar and extensively explored how a CBDC might negatively affect the current banking system if consumer deposits shift to a CBDC in an unsteadying way. Paramount would be better understanding what the design of a CBDC would look like and how it would interact with the existing payments system, the company said. Still, Mastercard’s letter made clear that the card network company isn’t sold on the idea of creating a CBDC and the company said outright that it believes more study is needed before proceeding toward one. “This approach ensures that the Federal Reserve retains institutional governance over core monetary infrastructure, while relying on private sector competition to drive innovation, efficiency, and a diversity of offerings,” Mastercard said in its May 15 letter. payments system in which it works closely with private players, referred to as a two-tier system, if it decides to move forward with a CBDC. In a 19-page document the card giant labeled as “strictly confidential,” despite the public nature of such comments to the Fed, Mastercard emphasized the need for the Fed to retain a U.S. While a deadline for the comments was in May, the comments have received little, if any, coverage. The Fed is trying to discern its own way forward on the issue as it considers how best to preserve the dollar as the global reserve currency.īelow are some highlights from the many pages of commentary provided by Mastercard, PayPal, Fiserv and Stripe to the Fed to guide its consideration. Meanwhile, many countries are racing ahead with issuing, piloting or making plans for their own digital currencies as the world embraces the concept of money evolving into a electronic form.
The comments from companies, consumer advocates, trade groups and everyday citizens are aimed at helping the Fed determine its course with respect to a CDBC. As Fed officials have commented publicly on the issue, they’ve taken varying positions.įed Chairman Jerome Powell initially promised in May 2021 to deliver the report last summer, but postponed publication several times, as the Fed grappled with other issues, including the resignations of several board members and rising inflation. While exploring the possibility of issuing a CBDC, the Fed didn’t take a position on whether it would pursue any such plan. payments system, but also voicing concerns about implementation.
The Fed’s 40-page report on a CBDC landed in January, suggesting possible ways a CBDC could enhance the current U.S.
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