A CBDC, Coming Soon?
Market Meditations | July 13, 2022
The Biden administration has been insistent on regulating the cryptocurrency industry in the United States. It would appear President Biden intends on having some regulatory framework in place as soon as possible. The executive order signed in March is starting to bear fruit, with plans being revealed and working papers being released.
- The issue of a Fed-based CBDC remains hotly debated, with the banking industry seeming to be opposed to the idea.
- The Treasury’s Office of Financial Research published a paper taking the opposite stance, disputing the idea that a CBDC would be bad for the banking industry.
- The paper claims that access to a CBDC would make a bank run less likely, leading banks to provide less insurance against this risk.
- The Treasury also claims that observing the flow of funds into a CBDC will give policymakers more timely information about the state of the financial system and depositor confidence.
- Presently, if a bank is having liquidity issues, policymakers must wait for the bank to report a problem, but a CBDC would allow them to monitor the on-chain data much like crypto analysts.
Make your voice heard! The treasury is accepting public comment on digital asset policy through August 8th 2022.
