While the Federal Reserve has made no decisions on whether to pursue or implement a central bank digital currency, or CBDC, we have been exploring the potential benefits and risks of CBDCs from a variety of angles, including through technological research and experimentation. Our key focus is on whether and how a CBDC could improve on an already safe and efficient U.S. domestic payments system.
CBDC is generally defined as a digital liability of a central bank that is widely available to the general public. Today in the United States, Federal Reserve notes (i.e., physical currency) are the only type of central bank money available to the general public. Like existing forms of money, a CBDC would enable the general public to make digital payments. As a liability of the Federal Reserve, however, a CBDC would be the safest digital asset available to the general public, with no associated credit or liquidity risk.
The Federal Reserve Board has issued a discussion paper that examines the pros and cons of a potential U.S. CBDC. As part of this process, we sought public feedback on a range of topics related to CBDC. The Federal Reserve is committed to hearing a wide range of voices on these topics.
Last Update: August 2, 2024
FAQs
Will CBDC replace cash? private digital payment solutions (rather than replace them).” The Federal Reserve and the Bank of England have also stated that CBDC will not replace cash.
What is the central bank digital currency CBDC? ›
A central bank digital currency (CBDC) is a form of digital currency issued by a country's central bank. It is similar to cryptocurrencies, except that its value is fixed by the central bank and is equivalent to the country's fiat currency.
Is central bank digital currency coming? ›
While the Federal Reserve has made no decisions on whether to pursue or implement a central bank digital currency, or CBDC, we have been exploring the potential benefits and risks of CBDCs from a variety of angles, including through technological research and experimentation.
Will the US launch a digital dollar? ›
Is the US Going to Digital Dollar? As of June 2024, the US Federal Reserve has not decided to transition to a CBDC or supplement its existing monetary system with one. It is researching the effects a CBDC would have on the dollar, the US, and the global economy.
Is the US dollar going away? ›
There is no reason to expect the U.S. dollar to collapse in the near future. 515 Such a change would require the entire world to change its adherence to an international monetary system that has the greenback at its center. As yet, no replacement is anywhere on the horizon.
Will cash be phased out? ›
But while moving to a cashless society has several benefits that will accelerate its adoption, and there are legitimate concerns over the role cash will have to play as its use dwindles, there's no sign that cash is going to disappear completely.
Why will cash never go away in the US? ›
Security Issues. Some consumers choose to pay for purchases with cash because of security concerns. Every time another big company suffers a breach that compromises payment card information, consumers worry about how that impacts them.
Is CBDC good or bad? ›
Put simply, a CBDC would most likely be the single largest assault to financial privacy since the creation of the Bank Secrecy Act and the establishment of the third-party doctrine. The threat to freedom that a CBDC could pose is closely related to its threat to privacy.
Are any countries using digital currency? ›
19 of the Group of 20 (G20) countries are now in the advanced stages of CBDC development. Of those, eleven countries are already in the pilot stage. This includes Brazil, Japan, India, Australia, South Korea, South Africa, Russia, and Turkey. 3 countries have fully launched a CBDC—the Bahamas, Jamaica and Nigeria.
What will replace the dollar? ›
Instead of replacing US dollars with the currencies of the world's largest economies, like China's renminbi and the EU's euro, central bankers are holding more currencies from smaller economies with a strong credit rating. These include the Australian dollar, the Canadian dollar, and the South Korean won.
The Federal Reserve will spend $931.4 million to print bills in 2023 — but there's a problem with U.S. cash. “We haven't modernized or changed our currency. That's probably a mistake,” Aaron Klein, senior fellow of economic studies at Brookings Institute, told CNBC.
Are credit unions going to digital currency? ›
Credit unions oppose CBDC
A recent letter noted that the organization “is concerned that the costly trade-offs are very likely to exceed hypothesized benefits of a CBDC,” presumably referring to the impact of a digital dollar on the banking and credit union sectors.
Are they getting rid of cash? ›
Cash use has been declining for years, but cash isn't close to going away. In 2022, there were a staggering 70 billion cash transactions, making it the third-most-common payment method.
What happens if the U.S. dollar goes digital? ›
Challenges with digital dollar status
The technology would, therefore, eliminate anonymous or under-the-table transactions. While this could help deter tax evaders, it also has the potential to give the government unprecedented visibility into American citizens' everyday purchases.
Will digital currency replace cash? ›
This type of money is known as a central bank digital currency (CBDC). It would not replace cash.
Will the US become a cashless society? ›
Similar rates have been recorded across other Scandinavian nations, while Hong Kong predicts cash will account for only 1.6% of point-of-sale (POS) transactions by 2024. But despite this global shift away from tangible currency, the US isn't likely to transition officially any time soon.
Is Bank of America going to digital dollars? ›
Central bank digital currencies (CBDCs) are coming, but a digital dollar is unlikely in the near term, Bank of America (BAC) said in a report on Monday.
