are likely to be available for american consumers to make payments electronically in real time. as such, it is not obvious what additional value a fed - issued digital currency would provide over and above these options. wholesale digital settlement tokens it is important for the fed and other central banks to continue to research these issues as technology evolves, exploring the technical and economic possibilities and limitations of centralbank - issued digital currencies. even though the case for a digital currency for general use may not be compelling, opportunities for more targeted and restricted use may nonetheless prove to have value. the private sector has been exploring a variety of ways of deploying the underlying technologies of digital assets that are native to a particular wholesale platform, to help to see https : / / fedpaymentsimprovement. org / faster - payments / path - to - faster - payments /. - 7facilitate finality of settlement. such wholesale digital settlement tokens could potentially reduce the time and costs required for wholesale financial transactions. this is being discussed, for instance, for the use cases of interbank payments, securities settlements, and cross - border transactions, where the introduction of a digital token native to a platform may facilitate certain types of settlement. likewise, it is possible at some point in the future that a limited central bank digital instrument that serves as a settlement asset for wholesale payment and settlement activity may hold some promise. several central banks have been studying this issue, and we have been actively watching these developments. 8 we are also interested in work that decouples the underlying distributed ledger technology from cryptocurrencies and attempts to build on the benefits of the technology, a topic to which i now turn. distributed ledger technology even if cryptocurrencies prove to have a very limited role in the future, the technology behind them is likely to live on and offer improvements in the way we transfer and record more traditional financial assets. distributed ledger technology could also facilitate other applications that could improve the way we share information, validate possessions, and handle logistics. recall that distributed ledger technology is the mechanism for recordkeeping and transfer of ownership that underpins cryptocurrencies. over the past few years, the financial industry has conducted a great deal of research and development on how to adapt the more promising aspects of distributed ledger technology for use with more traditional financial assets. the industry has moved a number of these projects through a series of phases, often developing more incremental changes at first in order

and operational challenges that would need to be overcome, such as the risk of creating a global target for cyberattacks or a ready means of money laundering. for starters, with regard to money laundering risks, unless there is the technological capability for effective identity authentication, a central bank digital currency would provide no improvement over physical notes and could be worse than current noncash funds transfer systems, especially for a digital currency that could circulate worldwide. in addition, putting a central bank currency in digital form could make it a very attractive target for cyberattacks by giving threat actors a prominent platform on which to focus their efforts. any implementation would need to adequately deal with a variety of cyber threats - - especially for a reserve currency like the u. s. dollar. second, the issuance of central bank digital currency could have implications for retail banking beyond payments. if a successful central bank digital currency were to become widely used, it could become a substitute for retail banking deposits. this could restrict banks ’ ability to make loans for productive economic activities and have broader macroeconomic consequences. moreover, the parallel coexistence of central bank digital currency with retail banking deposits see, for example, the recent joint committee on payments and market infrastructures and markets committee report “ central bank digital currencies, ” march 2018, https : / / www. bis. org / cpmi / publ / d174. pdf. a fed - issued digital currency might have implications for the rates and terms of funding for u. s. financial institutions and even the u. s. government as well as the transmission of monetary policy that i will not discuss here. - 6could raise the risk of runs on the banking system in times of stress and so have adverse implications for financial stability. finally, there is no compelling demonstrated need for a fed - issued digital currency. most consumers and businesses in the u. s. already make retail payments electronically using debit and credit cards, payment applications, and the automated clearinghouse network. moreover, people are finding easy ways to make digital payments directly to other people through a variety of mobile apps. new private - sector real - time payments solutions are beginning to gain acceptance in the united states. and the faster payments task force has laid out a roadmap embraced by a variety of stakeholders for a fast, ubiquitous, and secure payments system to be in place in the united states in the next few years. 7 in short, a multiplicity of mechanisms