But I do want to give some sense of the issues I think we will need to grapple with in this process, how I will be thinking about them, and the high bar that I think any proposal to create a U.S. CBDC must clear. So, let’s begin with a basic question: what problem would a CBDC solve?
To answer, we first need to define the term CBDC and assess the current state of the U.S. payment system. What Do We Mean by “CBDC"? The Bank for International Settlements has defined a CBDC as “a digital payment instrument, denominated in the national unit of account, that is a direct liability of the central bank.