issues that merit authorities ’ attention ( pdf ), june 27, 2017. 2 see david mills, kathy wang, brendan malone, anjana ravi, jeff marquardt, clinton chen, anton badev, timothy brezinski, linda fahy, kimberley liao, vanessa kargenian, max ellithorpe, wendy ng, and maria baird, “ distributed ledger technology in payments, clearing, and settlement ( pdf ), ” finance and economics discussion series 2016 – 095 ( washington : board of governors of the federal reserve system, 2016 ). 3 for example, the commodity futures trading commission published a statement on digital currencies making clear that many fall into the category of commodities under the commodity exchange act ( www. cftc. gov / pressroom / pressreleases / pr7231 – 15 ). the securities and exchange commission has published guidance on the treatment of digital currencies under the securities exchange act ( www. sec. gov / news / press - release / 2017 – 131 ). the internal revenue service has published guidance on the tax treatment of digital currencies ( www. irs. gov / pub / irs - drop / n - 14 – 21. pdf ). and the financial crimes enforcement network has published guidance on the treatment of digital currencies under the bank secrecy act ( www. fincen. gov / resources / statutes - regulations / guidance / application - fincens - regulations - personsadministering ). 4 see jerome h. powell, “ financial innovation : a world in transition ” ( speech delivered at the 41st annual central banking seminar, sponsored by the federal reserve bank of new york, new york, october 18, 2017 ). 5 / 5 bis central bankers'speeches

well as a long list of risk issues, including the potential deployment of unproven technology, money laundering, cybersecurity, and privacy to name a few. i am particularly concerned that a centralbank - issued digital currency that ’ s held widely around the globe could be the subject of serious cyberattacks and could be widely used in money laundering and terrorist financing. the effect of all this would significantly divert our focus from work to improve or establish new private - sector retail payment systems based on existing institutions. the prospect of a government - sponsored digital currency might even derail private - sector plans to enhance the payment services provided to their customers, thereby significantly disrupting the financial networks that exist today in ways that could create instability. for example, if payment activity radically shifted from using deposits at financial institutions to using central - bank - issued digital currency, deposits could significantly shrink and potentially disrupt financial institutions ’ ability to make loans that spur economic activity. that said, research into digital currency issues, including highly liquid and secure limited - purpose digital currencies for use as a settlement asset for wholesale payment systems, should continue. as technologies are developed and refined, old issues are resolved and new issues arise. other countries may have different environments and experiences. we should always be open to learning and understanding from the experiences of others. prudent innovation for the united states, the alternative to privately issued digital currency is not necessarily a publicly issued digital currency. instead, the near - term alternative is to build on the trusted foundations of the existing payment system and work to improve private - sector payment services. importantly, this means looking to the banking system, which holds the bulk of the transaction deposits in this country, to improve services. this began a number of years ago with internet banking. today, many banks offer around - the - clock internet - based access to accounts as well as mobile banking and payment capabilities. many banks typically allow real - time or near real - time transfers of funds among their own customer base. what does not yet exist in the united states is the sort of ubiquitous, real - time payment system that would allow banks and their customers to make transfers and settlements of funds across the banking system instantly, conveniently, and securely all the time. as my colleague at the board, jay powell, recently discussed at a conference in new york, the federal reserve has been working with the banking industry and a wide range of other payment system stakeholders to better understand the consequences of this state of affairs