Federal Reserve: Prerequisites for universal central bank digital currency (CBDC) -Part 5

Si Gyeongmin

Nov 09, 2021

Technology and infrastructure providers. Technology and infrastructure companies play an important role in today's market, and support from these groups is a prerequisite for the issuance of CBDC. Potential CBDC may come in many different forms, some of which can be realized through existing technology and infrastructure. Or, it can use new technologies, such as distributed ledgers, which are not currently in widespread use. Or, it can use a combination of existing technology and new technology. The CBDC agreement may also allow or accelerate the entry of new providers such as large technology companies (Bigtech) and financial technology companies (Fintech) into the field of payment or other financial services. Existing companies that are unable or unwilling to accept or develop new capabilities may be negatively affected when new entrants appear. Understanding these dynamics will help design choices and help resolve issues such as CBDC design, interoperability, market structure, and market adoption.

Other organizations. Other stakeholders, such as academic institutions, think tanks, standards organizations, and the international community, can provide information and support for CBDC. Academic institutions and think tanks can provide ideological guidance for decision-making. Standards organizations can contribute by defining terminology, developing taxonomy, and creating specifications and standards that support the wider ecosystem. Considering the role of the U.S. dollar in international trade and finance, as well as the opportunity to learn from CBDC pilots or initiatives in different jurisdictions, the international community, such as other central banks and policymakers, are also important. Other issues include how visitors and foreign companies use CBDC, how to use it overseas, and what rules should be established to govern such use.

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