Many countries' governments, most notably China's, are continuing to experiment with central bank digital currencies (CBDCs). Money 3.0 is moving full speed ahead, and with its recent white paper, entitled The US Dollar In The Age Of Digital Transformation, the US Federal Reserve, a conspicuous laggard, has finally started to weigh in, if only tepidly. The central bank's caution is understandable, but is it excessive?

The Fed sets an extremely high bar for introducing a retail digital dollar. For starters, we are told that the new form of money must provide benefits more effectively than other methods, presumably meaning dollar-linked digital stablecoins and existing bank accounts.