often, discussions about the evolution of the payments landscape focus on novel forms of payment, including cbdc, stablecoins, and other forms of digital assets. central bank digital currency first, i will touch on cbdc. for the purposes of this discussion, i will define cbdc as a new, digital form of central bank money widely available to the general public. some refer to this as a “ general purpose ” or “ retail ” cbdc. there are meaningful differences between this type of retail cbdc and what is commonly referred to as a wholesale cbdc, which is a term some use to refer to digital central bank money used to settle large - value transactions among banks. while i will return to the concept of - 3a wholesale cbdc in a moment, i would like to share my thoughts on the debate about the introduction of a retail cbdc in the united states. as i have noted before in other venues, there are two threshold questions that a policymaker should ask when contemplating a cbdc. first : what problem is the policymaker trying to solve, and is there a more efficient way to solve it? second : what features and considerations, including unintended consequences, should a policymaker think about before deciding to adopt a cbdc and in designing the operation of a cbdc? 2 on the first question, we have seen a range of arguments in the public debate about issuing a cbdc, including addressing frictions within the payment system, promoting financial inclusion, and providing the public with access to safe central bank money. these are all important issues. i have yet to see a compelling argument that a u. s. cbdc could solve any of these problems more effectively or efficiently than alternatives, or with fewer downside risks for consumers and for the economy. yet in the united states, we have a safe and efficient payment system that continues to evolve with responsible innovations, like the fednow service, which is the federal reserve ’ s new interbank system for instant payments that launched in july of this year. through fednow, participating banks, businesses, and consumers can send and receive instant payments in real time, around the clock, every day of the year, with immediately available funds. for additional discussion on cbdc, see michelle bowman, “ considerations for a central bank digital currency ” ( speech at georgetown university, washington, d. c., april 18, 2023 ), https : / / www. federalreserve. gov / newsevents

all, can only lead to the conclusion that the central bank must always carefully monitor economic developments to maintain price and financial stability. no country can afford to move out of line with the inflation rates in the rest of the world. 4. monetary policy and business cycles if it is so obvious that excessive money creation does not contribute to sustained economic growth, why do we hear from supposedly well - informed opinion makers that monetary policy is too tight and that it is putting a lid on real economic growth? my considered view is that some of these commentators often expect more from monetary policy than it can deliver. they tend to confuse short - term accelerations in output growth with long - term sustainable economic growth. this confusion arises because monetary policy affects aggregate domestic spending, and under certain circumstances a rise in spending can push output higher. such an increase in output will show up in growth in the short run that will be higher than the potential growth rate of the economy. such a short - term growth acceleration can be attained when there is an under - utilisation of resources. if there is a great deal of slack in the economy, then increased spending can raise the level of output. however, both the level and the growth rate of production are limited by the supply and quality of productive resources. if the employable resources are of poor quality, then output cannot increase unless there is a strong increase in the productivity of the resources already being used. at full utilisation of productive capacity, and here one recognises that in our modern technology - driven economy some resources are simply not employable in the short run, higher spending will lead to higher prices but no increase in output. under some circumstances, faster monetary growth and lower interest rates can increase demand. this in turn can lead to higher sales and output with little change in prices. under slightly different conditions, increased demand leads to inflation with little or no boost in output. the impact that a change in monetary policy will have on spending and production is uncertain at best. determining whether such a change would affect production instead of inflation will depend to a large extent on the stage of the business cycle. everyone involved in economic analysis will immediately agree that it is extremely difficult to determine the business cycle stance. the reserve bank compiles business cycle indicators for this purpose, but usually it is only possible to determine where the economy is in the business cycle a long time after the event because there is a delay in the compilation of statistics. moreover, clear trends are needed in information before