However, these experiences highlight increasing digitalisation and technological advancements in payments, and do not represent a fully-fledged digital currency.
This is truer still if inflation expectations increase materially. And if the Fed’s holdings work predominantly through the so-called portfolio balance channel, the cessation of purchases should not reverse any benefits attained. The Fed’s increased presence in the market for long-term Treasury securities also poses nontrivial risks. The Treasury market is special. It plays a unique role in the global financial system.