The American celebrity Kim Kardashian has been forced to pay a $1.26 million fine by the Securities and Exchange Commission (SEC). The fine pertains to her undisclosed promotion of EthereumMax (EMAX) over Instagram. She failed to reveal that she was paid $250,000 to promote the token. Kim Kardashian Promoting Crypto? Per a statement from the SEC on Monday, Kardashian’s problematic post contained a link to the Ethereum Max website, and instructions for purchasing EMAX tokens. The Instagram story said Kardashian’s…
The Federal Reserve recently released its discussion paper examining the costs and benefits of CBDC implementation in the United States. While inviting questions from the public, it marks the first official discussion from the central bank on how such a technology could improve domestic payments.
A United States CBDC
As released on the Fed’s website yesterday, the paper does not favour any particular policy outcome. Instead, it simply weighs existing payment infrastructure against the emerging cryptocurrency sphere and analyzes how CBDC’s could contribute to that dynamic.
“A CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank,” reads the report.
Purported benefits of a CBDC included safe and liquid central bank money, easy cross-border payments, and expanded access to the financial system. Alternatively, some given risks include effects on “financial sector market structure”, cost of credit, and efficacy of monetary policy.
The Fed believes a CBDC should adequately maintain user privacy while protecting against criminal activity. As such a contentious issue surrounding CBDCs, a US congressman recently introduced a bill to preserve user privacy in one’s presence. It would prevent the Fed from issuing a digital dollar directly to consumers, leaving that responsibility to retail banks.
As the report suggests, a digital dollar would “complement, rather than replace, current forms of money and methods for providing financial services.” It would also help protect and expand the US dollar’s dominance worldwide, thereby helping the US influence international monetary standards
Where Do Officials Stand?
While Powell remains uncommitted to CBDC implementation, governor Lael Brainard is a significant advocate of the idea. Besides the efficiencies one would provide, she believes a CBDC is necessary to keep up with countries like China moving forward with the idea.
She, like Powell, also thinks it could replace stablecoins, which run the risk of a bank-run-like event and of fragmenting the Financial system. For example, Tether has long faced scepticism that its reserves are not fully backing its tokens, which amount to over $78 billion today.
According to the Atlantic Council, about 90 countries are considering the launch of a CBDC. That said, Powell has stated that he is in no rush to implement such a project, as he is “more focused on doing this right than doing this fast.”