2.7 North America Central bank digital currency research in North America has gained significant momentum. Both the United States and Canada have embarked on comprehensive studies to evaluate the feasibility and implications of CBDC adoption. In the US, the Federal Reserve System is researching central bank digital currency, but has not provided strong indication of whether it will pursue a CBDC.57 In March 2022, the Biden administration released an executive order on ensuring the responsible development of digital assets.58 In 2020, the Boston Fed began collaborating with the Massachusetts Institute of Technology’s (MIT) Digital Currency Initiative on Project Hamilton, which has now been completed.59 The New York Fed also issued a report on Project Cedar, an experiment on wholesale CBDC.60 In Canada, the Bank of Canada has also been engaged in CBDC research in North America. The central bank, through Project Jasper, has conducted extensive experiments and pilot projects to understand the technological aspects, security considerations and potential economic implications of a digital currency. The Bank of Canada collaborated with other central banks and international organizations to share knowledge and expertise. It has also sought public input through surveys and consultations to gather diverse perspectives on the design and features of a potential digital currency.61 The below features are priorities in the North American region in their CBDC efforts. North America CBDC considerations TAB L E 7 Consideration Description Mitigating systemic risks North America has experienced significant financial crises in the past. CBDC policies may prioritize mitigating systemic risks by implementing features that enhance financial stability, such as real-time monitoring of transactions, increased transparency and improved risk management frameworks.62 International collaboration North American central banks actively participate in international collaboration and knowledge sharing initiatives regarding CBDCs. This priority for international cooperation allows North American central banks to benefit from global expertise while contributing to the collective understanding of CBDCs. Public input and transparency Central banks in North America prioritize public input and transparency throughout the CBDC research process through surveys, consultations and public forums. The aim is to ensure that the design and features of the CBDC align with the needs and preferences of society. Promoting innovation and fintech ecosystem North America is home to a vibrant fintech industry, including various innovative payment solutions and digital assets. CBDC policies may aim to foster an environment conducive to innovation, supporting collaborations between traditional financial institutions and fintech companies to explore new use cases and promote technological advancements in the financial sector. North America CBDC priorities: Promoting innovation: Financial innovation is key in enhancing the current financial system, and the jurisdictions in North America are focused on promoting this modernization. Enhancing financial system efficiency: As a global financial hub, any CBDC launched requires robust testing to ensure that any risks are mitigated and that benefits increase system efficiency. Promoting cross-border transactions: Facilitating seamless and efficient cross-border payments and reducing transaction costs between North America and other regions. Central Bank Digital Currency Global Interoperability Principles 20
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