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Briefing
Motives Matter: Examining Potential Tension in Central Bank Digital Currency Designs
Maniff, Jesse Leigh (2020-07-01)
As a new central bank liability, central bank digital currency (CBDC) has the potential to address various issues within current payments and financial systems. The motivation behind a CBDC will determine how it is designed; a CBDC designed to achieve one goal, such as broader financial inclusion, may have difficulty achieving other objectives.
Payments System Research Briefing

Working Paper
Central Bank Digital Currencies: An Old Tale with a New Chapter
Bordo, Michael D.; Roberds, William (2022-12-18)
We consider the debut of a new monetary instrument, central bank digital currencies (CBDCs). Drawing on examples from monetary history, we argue that a successful monetary transformation must combine microeconomic efficiency with macroeconomic credibility. A paradoxical feature of these transformations is that success in the micro dimension can encourage macro failure. Overcoming this paradox may require politically uncomfortable compromises. We propose that such compromises will be necessary for the success of CBDCs.
FRB Atlanta Working Paper , Paper 2022-18

Discussion Paper
The Future of Payments Is Not Stablecoins
Garratt, Rod; Lee, Michael Junho; Martin, Antoine; Torregrossa, Joseph (2022-02-07)
Stablecoins, which we define as digital assets used as a medium of exchange that are purported to be backed by assets held specifically for that purpose, have grown considerably in the last two years. They rose from a market capitalization of $5.7 billion on December 1, 2019, to $155.6 billion on January 21, 2022. Moreover, a market that was once dominated by a single stablecoin—Tether (USDT)—now boasts five stablecoins with valuations over $1 billion (as of January 21, 2022; data about the supply of stablecoins can be found here). Analysts have started to pay increased attention to the ...
Liberty Street Economics , Paper 20220207

Discussion Paper
What Makes Cryptocurrencies Different?
Brownworth, Anders; Durfee, Jon; Lee, Michael Junho; Martin, Antoine (2023-08-16)
Permissionless blockchains, which support the most popular cryptocurrency networks like Bitcoin and Ethereum, have shown that it is possible to transfer value without relying on centralized trusted third parties, something that is new and remarkable (although perhaps most clearly useful for less developed financial markets). What makes permissionless blockchains able to transfer value without relying on a small number of trusted third parties is the combination of several components that all need to work together. The components themselves are not particularly new, but the combination of ...
Liberty Street Economics , Paper 20230816

Briefing
Observations from the Retail CBDCs of the Caribbean
Noll, Franklin (2024-04-10)
Three retail central bank digital currencies (rCBDCs) have been issued in the Caribbean, but thus far all have struggled to achieve expected adoption from both consumers and merchants. The efforts to launch these rCDBCs offer three takeaways: 1) the underlying technologies of rCBDCs may have little effect on adoption; 2) an rCBDC may need to demonstrate value added to entice consumers to use it; and 3) an rCBDC platform may need to be integrated into the larger financial ecosystem to be widely adopted.
Payments System Research Briefing

Tokens vs. Accounts: Why the Distinction Still Matters
Kahn, Charles M. (2020-10-05)
Computer science experts may say the difference is irrelevant in the digital world. But when it comes to payments, distinguishing the two still has value in the real world.
On the Economy

Briefing
How Did We Get Here? From Observing Private Currencies to Exploring Central Bank Digital Currency
Maniff, Jesse Leigh (2020-02-26)
The emergence of private digital currencies has inspired discussion over the possibility of central bank-issued digital currencies. While privately issued currencies are not new, the rise of digital currencies has highlighted both concerns and opportunities for central banks.
Payments System Research Briefing

Working Paper
Stablecoins: Growth Potential and Impact on Banking
Liao, Gordon Y.; Caramichael, John (2022-01-31)
Stablecoins have experienced tremendous growth in the past year, serving as a possible breakthrough innovation in the future of payments. In this paper, we discuss the current use cases and growth opportunities of stablecoins, and we analyze the potential for stablecoins to broadly impact the banking system. The impact of stablecoin adoption on traditional banking and credit provision can vary depending on the sources of inflow and the composition of stablecoin reserves. Among the various scenarios, a two-tiered banking system can both support stablecoin issuance and maintain traditional ...
International Finance Discussion Papers , Paper 1334

Speech
U.S. Regulations and Approaches to Cryptocurrencies
Held, Michael (2019-12-03)
Remarks at the BIS Central Bank Legal Experts’ Meeting, Basel, Switzerland
Speech

Briefing
Déjà Vu All Over Again: What the Return of Private Currencies Could Mean for Central Banks
Maniff, Jesse Leigh; Zubradt, Susan (2021-06-30)
Private digital currencies, or “crypto-assets,” have surged in popularity recently, but they are not new to the payments landscape and may present familiar challenges for central banks. Although they have yet to fulfill the main functions of money, crypto-assets still have the potential to affect financial stability and the implementation of monetary policy.
Payments System Research Briefing

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