Following our Stablecoins paper on January 7, 2022, our team is pleased to provide some initial thoughts on the Federal Reserve’s discussion paper from January 20, 2022, examining the pros and cons of a potential U.S. central bank digital currency (CBDC). The CBDC paper follows a string of important developments in the United States over the past several months and is an important milestone in the broader digital currency transformation discussion.

Our observations focus on key aspects of the CBDC paper, building on an idea from our Stablecoins paper: a future where federally regulated stablecoins and a CBDC co-exist, and multiple forms of money grow. Our piece may be valuable for those tracking stablecoin and CBDC developments domestically and globally, including regulators and central banks, payment processors, money transmitters, depository institutions, and stablecoin issuers and wallet providers.

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