Full text Adobe PDF file format


If the web 3.0 requires a public ledger–based payments platform, central bank digital currency (CBDC) is unlikely to provide the digital currency needed to fuel the smart contracts of tomorrow. This payments dilemma can be solved by a hybrid digital currency that includes a new type of bank deposit as well as regulated private stablecoins, both of which clear and settle on a next-generation public ledger created and managed as a joint venture between banks and private stablecoin issuers. With this payments platform under Federal Reserve oversight, there would be no need for the Federal Reserve to issue CBDC.

Key findings:

  1. Fed CBDC looks a lot like the "TNB" business model rejected by the Fed.
  2. Should the Fed issue CBDC, politics could shape CBDC design.
  3. Instruments like private stablecoins have been in use for centuries.
  4. If the existing payments system cannot evolve to meet the needs of web 3.0, a public ledger payments system may be inevitable.

Center Affiliation: Center for Financial Innovation and Stability

JEL classification: E42, E58

Key words: central bank digital currency, private stablecoins, web 3.0, smart contracts


The Federal Reserve Bank of Atlanta's Policy Hub leverages the expertise of Atlanta Fed economists and researchers to address issues of broad policy interest. Our research centers coordinate this work and seek to influence policy discussions. Areas of interest include: forecasting, fiscal policy, and macroeconomics (Center for Quantitative Economic Research); financial stability, innovation, and regulation (Center for Financial Innovation and Stability); human capital, labor markets, health, and education (Center for Human Capital Studies); and government-sponsored entity reform, mortgage markets, and affordable housing (Center for Housing and Policy). Sign up for email updates. Under "Publications" select "Policy Hub."