A Fed digital currency looks inevitable. So do the problems.

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Below is an edited transcript of the podcast:

AARON KLEIN: So I was in China quite a few years ago, several years ago, researching, among other things, the stability of their banking system. And I'm in Shanghai, and I'm hanging out with an old college friend of mine who lives there, and he takes me to his person to get some handmade clothing. And I sit and negotiate, get my measurements taken, bargain over the price of everything. Knowing this was coming, I had done what I'd always done around the world, which is gone to an ATM beforehand, and made sure I had a lot of cash to pay for it. When I went to pay in cash, the woman said “No, I don't want your cash. Alipay.” I said, “Ali what?” She said, “We Pay.” I said, “We what?” I said, “Here's a credit card.” She said no chance, and we had a back and forth. I had never seen kind of, you know, a negotiating merchant for clothing refuse cash. My friend explained to me that there was a new system in China that was taking off on these QR codes … on their versions of Amazon and Facebook.

HANNAH LANG: This is Aaron Klein, a fellow at Brookings and the policy director of the Center on Regulation and Markets. And what he was experiencing firsthand was the explosive growth of cashless payments in China over the course of the last decade.

BLOOMBERG: China is among the growing number of countries showing that payments can happen cheaply and easily without banks or credit cards. In contrast, U.S. consumers still rely on banks for most of their purchases.

CBS THIS MORNING: BEN TRACY: What do you think of people who use cash to pay for things?

VOICEOVER: That’s rare and weird, he says. Only the elderly and people who don’t know how to use a phone pay cash.

LANG: I feel like I can almost relate to this man. I buy groceries using a credit card, I pay rent online, and I complete a Venmo request every month to pay my share of utilities. I can move money from my checking account to my savings account just by pressing a button on my phone.

LANG: So how did you end up paying for the suit?

KLEIN: She eventually took the cash.

LANG: Oh, okay.

KLEIN: There was no other thing ... She tried to get my friend to front the money in his account. He was like, no, no, no, this is between y'all, and I can't, you know,” … And I start saying, “Why doesn't she want the cash?” And he said, “Well, you know, she's going to send it to her back office, and this is how they all move money around.”

LANG: Digital payments have become a part of everyday life all over the world in the last 10-15 years, and its advantages over paper money are considerable. In fact, most of the money I ever come into contact with is digital — it’s numbers on a screen or on a receipt. But these are payments through intermediaries, so when I buy something with my credit card or Venmo my roommates for utilities, what’s really happening is I’m promising to make a payment later with a settlement transaction. But the next frontier in payments is a fully digital dollar — one that cuts out the middleman and settles payments almost instantly. And there’s a widely-held expectation that it’s only a matter of time before the Federal Reserve starts issuing its own digital currency.

A project like that would be unbelievably ambitious, but it could also have dramatic, positive implications for income inequality, payments modernization and security. It also raises important questions about privacy, surveillance and technology. And even if it is possible to develop a cashless economy, is it a good idea?

For American Banker, I’m Hannah Lang, and this is Bankshot, a podcast about banks, finance, and the world we live in.

ADRIEN TRECCANI: I would say that digital currency is extremely ambiguous. Everything is already digital. If you think about banking money, you know, when you put a wire transfer it is already digital money in a way.

LANG: This is Adrien Treccani, who’s speaking to me from his home in Switzerland. He founded the digital asset infrastructure company METACO in 2015 and is now CEO.

TRECCANI: Cash is physical. It is practical in the sense that it is anonymous in different ways, but the main pain is that you can't use it on the internet; it's not a cyber-compatible medium of payments.

LANG: When people talk about digital currency, they’re generally referring to money that is stored digitally, whether on a credit card or in an online bank account or another mechanism entirely, and they’re often a liability for commercial banks. Cryptocurrencies are a type of digital currency, but they aren’t pegged to any denominated currency — they’re more like a commodity whose relative value goes up or down.

Central bank digital currency is what you probably suspect it might be: a digital version of a central bank’s paper currency. But instead of keeping paper currency in a physical wallet in your pocket, users keep digital currency in some sort of central bank-managed digital wallet, which could be a smartphone or even a flash drive. You’ll hear it referred to often in this episode as CBDC.

In the United States, most people, including Federal Reserve Chair Jerome Powell, have said that a CBDC wouldn’t replace physical cash, but instead would be an additional option out there for consumers to use and would complement the existing payments system.

NEHA NARULA: To me, one of the key differentiators of central bank digital currency is that it's actually issued by the central bank, so it's the equivalent of digital cash.

LANG: This is Neha Narula.

NARULA: My name is Neha Narula. I'm the director of the digital currency initiative at the MIT Media Lab, and our group there works on cryptocurrency and blockchain technology research in addition to thinking about digital currency more broadly, such as central bank digital currency. If you think about the cash in your wallet, there's no intermediary required to spend that. If you've got cash, and I want to pay you, I can give you that cash, and you can accept it, and we don't have to have accounts at the same place. We don't have to authenticate with anyone. It's just ours and we can do that. So central bank digital currency is kind of getting towards that ideal of cash, but in the digital realm.

LANG: You won’t find a central bank digital currency in most parts of the world yet, although a lot of countries — including the United States — are researching and debating the merits of developing one. Yet there is still a lot of confusion about what it really is and how it would work in practice.

ARI JUELS: In general, we need to be cognizant of the fact that new technologies have unintended and unanticipated side effects.

LANG: This is Ari Juels.

JUELS: I'm Ari Juels. I'm co-director of the initiative for cryptocurrencies and contracts, or IC3, a faculty member at Cornell Tech, and I also have an industry affiliation. I'm chief scientist at Chainlink.

JUELS: There is the risk that a CBDC — naively developed — will leak information in ways that people haven't anticipated. That's something that we'll have to pay careful attention to.

LANG: The concept of central bank digital currency largely began being discussed in earnest after Bitcoin was invented in 2008. You’ve probably heard of Bitcoin — it’s a peer-to-peer decentralized digital currency, meaning that it is issued without a central bank and can be sent directly to another user without the use of intermediaries, like banks or credit card companies. Eliminating those intermediaries means transferring Bitcoin involves almost no fees, and unlike services like Zelle and PayPal, you don’t have to have a bank account to send Bitcoin to another user.

Bitcoin is also based on blockchain technology — another buzzword you’ve likely heard — and that technology acts as a digital ledger that records transactions and could be used to prevent fraud.

But it’s not perfect. Bitcoin, along with other cryptocurrencies like Ethereum and Ripple, have had their values fluctuate wildly since their introduction — not something one looks for in a currency. And cryptocurrencies also have somewhat of a shady reputation. The anonymity that they inherently provide by cutting out the banking system also makes them the currency of choice for black markets, ransomware attacks, kidnappers and even terror organizations.

Bitcoin made central banks start paying attention to digital currency. But in June 2019, when Facebook announced its Libra cryptocurrency project, central banks were forced to start seriously considering how cryptocurrency could impact things like financial stability.

LIBRA AD: Introducing Libra, a new global currency, designed for the digital world… It’s powered by blockchain, making it safe and accessible.

LANG: Facebook, to put it nicely, is not universally liked. There are serious questions about the company’s use of user data, privacy, penchant for disinformation, and I can go on. But Facebook’s foray into the world of money raised eyebrows across the globe, especially because it planned to base its currency on a basket of global currencies. Here’s Treasury Secretary Steven Mnuchin in July 2019.

STEVEN MNUCHIN: The Treasury Department has expressed very serious concerns that Libra could be misused by money launderers and terrorist financiers.

LANG: And this is Federal Reserve Chair Jerome Powell talking about Libra just last month.

JEROME POWELL: You ask about Libra, and I agree that it highlighted the need to improve cross-border payments and generally succeeded in focusing attention on payments-related issues, including consumer protection, cybersecurity and privacy.

KAREN PETROU: Libra obviously, it's still — people are going to be talking about the world's worst product launch in, you know, modern history, because they had no idea that they were doing anything more than launching something that they thought was really super cool.

LANG: This is Karen Petrou, managing partner at Federal Financial Analytics.

PETROU: Just because something is super cool doesn't mean it doesn't have significant policy issues.

LANG: As I mentioned, the Federal Reserve had been thinking about digital currency for a long time before Libra, but as a kind of academic question. Libra raised a significant potential for a commercial currency to jump out ahead of the Fed, however, and some argue the COVID crisis has made the need for a digital dollar even more apparent.

TRECCANI: The question is really, what is the urgency? And if you had asked me 12 months ago, I would have told you that the urgency wasn't there. You know, the research was there, but it would still take potentially five to 10 years. In the last six months with COVID on one side and with the projects like Libra on the other side, urgency is much higher. And I can feel that even the skeptical central banks are now taking this seriously

LANG: Part of the issue here is a payments problem, and for years the Fed had been pressured to find a way to speed up the antiquated Automated Clearing House payments apparatus. In August 2019 — just a month after the Libra announcement — the Fed said that it would be building its own faster payments network that would enable people to send and receive money instantly.

This is Dan Doney.

DAN DONEY: I'm Dan Doney, the CEO of Securrency, and we're a financial logistics company. So right now, if the US had issued a digital currency, a digital dollar, that was in my favorite wallet, whatever it is that I downloaded, and I wanted to send it to you, you would simply pop a QR code, which is the address. I could scan that address, click a button, send it to you, and you could, within a matter of … some cases, seconds, begin to use that value somewhere else.

LANG: It sounds simple enough, but this is actually something that we don’t have in the U.S. right now. For example, how long did it take you to get your stimulus check? A lag of a few business days, or in the case of the stimulus checks, a few weeks or months, might not sound like a huge deal, but for people at the lower end of the income spectrum, it can be the difference of not being able to make rent on time.

KLEIN: There's no reason that I should be able to access the brand new Borat movie in my living room faster than I can cash a check.

LANG: The Fed last year announced it would construct a real-time payments network to address this issue, and plans to launch an initial version in 2023 or 2024. More on that later.

But in the meantime, the payments problem helps to explain why some Americans have turned to nonbanks to cash checks, get small dollar loans and to wire money. Plus, things like overdraft fees and account minimums disproportionately penalize lower income earners, which can cause them to rely on cash. Proponents of central bank digital currency argue that it could be a way to give everyone equal access to digital money, which would in turn expand access to the financial system. It would also make cross-border payments easier and cheaper.

And this is an important point for the Fed.

POWELL: There are a number of ways that a CBDC might improve the payments system, and it is mainly this area that motivates our interest.

TRECCANI: Obviously, this is where I think and most think that there is most potential impact where a central bank creates a coin that is accessible to pretty much any citizen or any individual. And even more than that, it would be available not just to the already banked citizens, but potentially to all of these unbanked people that don't have access to a bank account, and today are excluded from the financial system because of that.

LANG: With a central bank digital currency, you could also get many of the same advantages that make Bitcoin so attractive, like secure transactions based on secure technology and lower fees, because there would be no need for the usual slate of companies to process payments.

But it could also counteract some of the more negative aspects of Bitcoin, like its tendency to be used for questionable and illegal activities. Many people argue that central bank digital currency could bolster existing anti-money laundering efforts that already exist at banks.

DONEY: The anti-money laundering component actually gets easier, because it's easier to trace those flows and to know who's been up to what kind of bad activity in the space… Banks spend $270 billion a year on compliance functions. We believe you can automate most of those through smart digital currencies, that is, smart tokens.

NARULA: We're really used to mediating criminal activity by controlling who has access to the payment system. And I would argue that that isn't really going to work as we move forward into the future. It's really onerous. The banks don't like doing it. It's arguable that we're doing it well right now, that we're actually catching the activity we want to catch. And I think the existence of an open payment network like Bitcoin makes us, gives us the opportunity to rethink how we actually want to check for and prevent criminal activity. Maybe we can do it at the edges; maybe we can do it in a different way than what we're actually doing right now.

LANG: So to recap, the potential benefits of a central bank digital currency are that it could be a way to expand financial inclusion to those who don’t have access to the banking system, it could be a cheaper and faster way to make payments and it could help law enforcement catch and track illicit activity. It could also address a declining use of cash in the U.S. and provide consumers with an additional payment option.

But there are still a lot of unanswered questions about central bank digital currency, especially how it would work in the United States. Would it just be used by banks for settlement purposes, or could it be used in the retail space? Would it use blockchain technology, like Bitcoin? Would I store it on my phone?

Those are just a few of the questions that the Fed is working on as we speak. And we’ll ask them how that work is progressing after this short break.

LANG: The Federal Reserve is, of course, the central bank of the United States. But it also has twelve regional banks that serve as their own research institutions and often spearhead certain research projects. In this case, the Federal Reserve Bank of Boston, in collaboration with MIT, are hoping to give policymakers in Washington a fuller picture of how a digital currency could work through something called Project Hamilton.

JIM CUNHA: So Hamilton is our name of our project. And I want to mention that it's obviously partially for Alexander Hamilton, for obvious reasons, but also for Margaret Hamilton, who was the head of an MIT Technology Lab that developed the Apollo space software.

CUNHA: I’m Jim Cunha. I’m a senior vice president at the Boston Fed.

LANG: The goal of Project Hamilton is to build and test a prototype of a central bank digital currency to see if it could handle rapid transactions, how quickly it can execute transactions, if it could be available at all times, and how resilient it would be to cyberattacks.

CUNHA: So we think that work will take us, you know, nine months to a year. And then we're going to publish results, so we're going to actually publish a research paper with MIT and then open source the code. And the second phase is we look at different design options or policy options… This phase two is going to test different options just to help inform decision makers as to what the trade-offs are and can we actually build a system that goes fast enough and meets all the requirements. So we're thinking that's a two- to three-year effort there.

LANG: So, you know, how does that work? How do you build something without making some of these key decisions?

NARULA: I would argue that the main point of our work is to do the detailed technical research necessary to give policymakers the information they need to make decisions in the future.

LANG: This is Neha Narula again. She heads the MIT initiative that is working with the Boston Fed on this project.

NARULA: That's a major goal of what we're doing is to explore different points in the design space, and to get real information about the trade-offs and how they might affect all of the different factors that we're looking at for a successful CBDC.

LANG: Although they are trying to remain agnostic on some of the policy decisions that come with building a central bank digital currency, there are still some key considerations that the researchers have looked at in order to drive the conversation.

CUNHA: Obviously, we're looking at distributed ledger blockchain as promising, for a number of reasons. But we're not tied to that. We don't want to have blinders on to other, other types of technologies. We do think that whatever we'll need is, is still not — doesn’t exist yet, or may be a combination of different technologies. So by trying to make sure that we're thinking — that’s one of the reasons why we're with MIT, because some of this may be yet to be built.

LANG: Cunha says they’re also considering whether the system would be used for retail purposes — say, if I would be able to use it to buy a cup of coffee — or for wholesale purposes, like interbank settlements, in which case it wouldn’t be used by the general public.

CUNHA: We are considering this retail versus wholesale, and there's always a fine line between whether a retail system can be used for some wholesale.

CUNHA: We're not building a wire transfer-like system that usually has some other characteristics and requirements. We're thinking, you know, retail.

LANG: And the Boston Fed and MIT are designing their prototype so that it could have intermediaries, like banks, but doesn’t necessarily have to. A lot of people in the central bank digital currency space bring up the option of a tiered model, which would be somewhat similar to the current cash system we have now.

CUNHA: For instance, today, cash is issued by the Fed to banks, then to the public, so it could follow that model or it could follow another. Our job really is to make sure we're designing it in a way that doesn't lock us into one option or the other.

LANG: The United States hasn’t made a decision on whether or not to go forward with central bank digital currency yet, but the Boston Fed and MIT project is one of the many efforts the Federal Reserve is undertaking to inform that decision. Here’s Fed Chair Jay Powell again.

POWELL: We have not made a decision to issue a CBDC, and we think there’s a great deal of work yet to be done as well as extensive public consultation to be had with all stakeholders before making such a decision.

LANG: But regulators all over the world are already beginning to game out how a digital future would work. In an October report written jointly by the central banks of the United States, Canada, the European Union, Japan, Sweden, Switzerland, the U.K. and the Bank for International Settlements, regulators identified three foundational principles that they say will guide their research on central bank digital currency. They said that a central bank digital currency should coexist with cash and other types of money, should promote broader innovation and efficiency and should not harm monetary and financial stability.

But there are still a lot of unanswered questions about central bank digital currency and how it would actually work in practice. And for some, if it’s even worth it. Here’s Aaron Klein again.

KLEIN: I'm not sure if the reality is going to match up to the hype. It is not clear to me what a central bank digital currency could do more effectively than the existing digital currency without other more radical changes to the financial system.

LANG: Remember that issue we talked about before, how people in the U.S. don’t have immediate access to payments? That’s one of the goals that central bank digital currency would look to address, but Klein thinks it could be accomplished just by mandating immediate fund availability at banks and letting banks decide which private-sector platform they want to use to achieve that.

KLEIN: Real-time digital payments is has been around the world for a decade and more and could be achieved tomorrow in the United States… Central bank digital currency is a different idea of the role of the central bank and the relationship of holders of money to that central bank.

PETROU: If the Fed pursues CBDC in that model, then it's just basically a still faster payment system option, but the portals into and out of it are in the banking system, and CBDC would be essentially invisible to the broader economy.

JUELS: In principle, if retail banks act as the front ends for the system, the user experience is very similar to what it is today for online banking. But, if that's the case, one of the main goals of CBDC development may not be attained, and that is financial inclusion.

LANG: Still, there is a lot of frustration that the United States doesn’t currently have any low-cost faster payments options at all, and some people see central bank digital currency as a way to finally offer one.

NARULA: The real-time payment system has had decades to innovate, and they haven't… They have had decades to make this faster, to make this better, to make this easier to use. There are incentives in place, and there is a structure in place that is preventing this from happening. And so I don't think that we can just say, “Ah, all we need to do is innovate in the existing real-time payments infrastructure,” because that hasn't happened for the last 40 years. And I don't believe that, that we have any reason to think that it will really happen and continue to happen for the next 40 years.

DONEY: Look, I can do very efficient transactions on PayPal. But I have to be a PayPal user… And so only if PayPal innovates do I get the benefit of the speed of PayPal. So there can't be other parties who innovate. It's only PayPal's speed… It also just completely kills innovation in that model, because now it's only, we only move at the speed of that central clearinghouse in terms of all other innovation.

LANG: One thing everyone can agree on, though, is that central bank digital currency really needs to consider what kind of implications it could have on user privacy, especially since it would produce an unprecedented level of data.

JUELS: While there are certainly benefits, particularly in bringing the unbanked into the financial system and allowing users direct access to their funds, it's a tricky proposition… If consumers hold accounts with the central bank, and are transacting using those accounts, suddenly the Fed is privy to a large swath of the transactions happening in the national financial system. That's a huge amount of very sensitive information that the Fed doesn't have today and is presumably not well equipped to secure at this point.

PETROU: It's only a tool for controlling … better control of AML and terrorist financing, if the government controls the payment system and knows enough about each of us to do that better than the private sector. That's a real hard-nosed reality. For the Fed to be better at AML than banks, the Fed has to know more about me than banks do.

LANG: This is something that might be acceptable in China, but would likely be hard to swallow in the U.S.

NARULA: Though China talks about having what they call controllable anonymity, the truth is actually, the Chinese central bank and government will have access to fine-grain transaction details. They will be able to see all of the payments that people are making and collect information about all of those payments. That is — might make sense in China. But I don't think that makes sense in the United States… And we have to think about how to architect the system so that isn't the case.

CUNHA: How do you have privacy of transactions versus what we have to do is make sure bad people aren't spending money on bad things, be it terrorist financing or, or just money laundering or whatever it is?... We don't have this solution yet. But if we're doing it as a research effort, starting with an open playing field, with a problem to solve of having the most privacy possible while still stopping the bad guys. I think that's the real, that's the real goal here is to try to advance how to do that without presuming that it's going to work like it does today.

LANG: If the United States ultimately decides to develop a central bank digital currency, the Federal Reserve will have to make some tough decisions around how to balance the competing interests of user anonymity and detecting illegal activity. But the advent of digital currency is also coming at a time when digital thefts are becoming increasingly sophisticated.

CBS EVENING NEWS: It was a high-tech bank robbery, and you may be a victim. A hacker broke into Capital One bank and made off with enough personal information to steal the identities of more than one hundred million people in the United States and Canada.

CBS CHICAGO: It’s a name we’ve come to know and often trust, but PayPal’s reputation is taking a hit as criminals are upping their game in a new twist to a nasty scam that’s taking millions from consumers.

JUELS: The difference with a CBDC, potentially, is that it will bring a further degree of automation or transaction finality to the financial system that may make hacks a little bit more challenging to unwind and therefore may require more real time facilities for dealing with hacks, vulnerabilities and so on and so forth.

TRECCANI: Obviously the big challenge on technical — technology side today is, how do you make sure, on the central bank side, that your platform is so secure that counterfeiting digital cash is impossible, and it’s very much the same game as making sure your bank notes cannot be counterfeit.

LANG: It’s also worth noting that there is a digital divide in the United States and all over the world. Not everyone has access to a smartphone or broadband internet access, and a digital dollar might not be available to everyone equally.

PETROU: Smartphones seem ubiquitous, but the digital infrastructure on which to run them is very spotty.

CUNHA: Well, there's a lot of places in, you know, rural America, and even in my lake house in Maine, where you don't get good service. So how do you design it such that it can be used in proximity with another device without the internet necessarily being available, because you can't have it shutdown.

LANG: After Hurricane Maria hit Puerto Rico in 2017, island-wide power outages forced it to become cash only, and there was such a high demand for cash that the Fed actually had to fly in shipments of cash, sometimes multiple times a day. And that’s a factor a central bank digital currency would have to take into account.

LANG: So do you think using it as a tool to expanding access to the financial system would also come with other considerations like widespread access to broadband smartphone availability, if that was, you know, what the digital wallet was on?

NARULA: I think for a CBDC to really have the, some of the attributes of cash, we have to be able to use it in some way when the electricity is down, when we don't have access to a network. And that is part of our research agenda is to look into ways that we might be able to use a CBDC under these types of circumstances.

LANG: Policymakers will also have to make sure that a future central bank digital currency is accessible to anyone that wants to use it.

PETROU: For all the talk about how great mobile banking is, a lot of it's still inaccessible to people with visual impairments and to the elderly, and I don't think we want to have a banking system that crowds them out. Just as we have laws now that require ramps to get in and out of bank branches, and lower teller windows so that people in wheelchairs can access banks, we need to think very hard about digital currency and replacing the current banking system in terms of inclusion, if it's not fully accessible to persons with disabilities, and to the elderly, including persons with intellectual disabilities, for whom complex transactions can be complicated.

CUNHA: Eventually we have to be thinking about, so how do individuals actually access it? What's their access point? How do businesses access it? Eventually a business has to be able to accept the CBDC. You know, if it's just for P2P — person to person — payments, well, that's not currency. That's not — we're not solving the problem. So, you know, as we go further along with this, we will start to think about what is the user interface, be it the government or a business?

LANG: At the same time as researchers in the U.S. grapple with these questions, other countries — like China, for example — are plowing ahead, increasing the risk that the United States could be left behind, which could endanger the dollar’s supremacy as the global reserve currency. Here’s Sen. Tom Cotton, a Republican from Arkansas, during a June Senate Banking Committee hearing.

TOM COTTON: The U.S. needs a digital dollar but not exactly for the same reason that most other countries are embracing digital currencies… This is more about keeping the dollar’s reserve currency status and ensuring its role in global payments. The U.S. dollar has to keep earning that place in the global payments system. It has to be better than Bitcoin or any other type of cryptocurrency. It has to be better than a digital yuan. The dollar has unmatched advantages, but without digitization, I worry that the dollar may end up being like the very best flip phone in 2006.

LANG: This is precisely one of the reasons the Fed wants to be a leader in the work around the development of a central bank digital currency. Here’s Powell again.

POWELL: In fact, I actually do think this is one of those issues where it’s more important for the United States to get it right than it is to be first. Given the dollar’s important role globally, it’s essential that we remain on the frontier of research and policy development.

DONEY: China has openly stated that it is their goal to disrupt, to displace the US dollar as the means of transactions internationally, which would have massive impact on the US financial sector if they're successful, and they're not kidding around. They are investing heavily in this technology, and we can go through a long list of investments that they have put forward… If U.S. banks don't take advantage of this, they will get just buried by the competition, who will be cheaper operationally than US banks. I'm confident of that.

LANG: But Cunha says the U.S. is doing more behind the scenes to research and develop a digital currency than it may appear.

CUNHA: We're not worried about, you know, being a laggard. We're definitely not laggard. I'd say we're probably, I mean, obviously, everybody knows that China has said they've issued theirs, so it seems like they're further along. But, you know, we're up there with the other central banks as far as, you know, being leaders of understanding what's possible, and I think Hamilton — Project Hamilton shows that.

LANG: As Powell said, the U.S. believes it’s more important to get a central bank currency right than it is to get one first. And getting a CBDC right partly means determining what exactly it is and what exactly it could be used for. We’re not there yet, but we could be in the future.

PETROU: You can do this a lot of different ways, Hannah, the technology is likely to be infinitely expandable, just like nuclear technology. You can do lots of things with it. The question is, depending on what you do, do you like the consequences? Because the consequences are not just all about financial inclusion or payment system speed or some of the other policy issues people sometimes talk about. It's a lot more complicated.

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