Treasury Official Lays Out U.S. Objectives on CBDC

Treasury Under Secretary for Domestic Finance Nellie Liang asserted that a U.S. central bank digital currency ("CBDC") must be able to: (i) serve as legal tender; (ii) convert one-for-one to other forms of central bank money (i.e., reserve balances or paper currency); and (iii) clear and settle almost instantly.

In an address before the nonprofit think tank Atlantic Council, Ms. Liang identified several objectives of a Treasury-led interagency working group (the "Working Group") tasked with assessing how a U.S. CBDC for the purpose of policy objectives would:

• help preserve the U.S. Dollar's role in the global economy by strengthening global financial leadership and bring about economic and strategic benefits such as (i) lower transaction and borrowing costs and (ii) influence on the internal structure of the international financial system;
• impact national security if the development of foreign CBDCs were to weaken the strength and centrality of the U.S. financial system; and
• protect the privacy of users and prevent risk of illicit financial transactions.

Ms. Liang emphasized the importance of evaluating the design implications of a wholesale CBDC and/or retail CBDC and how each would differ from central bank reserves with regard to technological features and user accessibility.

She stated that the Working Group plans to consult with other institutions as foreign jurisdictions continue to explore CBDC development to ensure that CBDCs interact safely within the existing global financial infrastructure, and support financial stability throughout the international financial system. Ms. Liang noted the importance of the Working Group's contribution to international standard-setting and technical expertise in the development of CBDCs.