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What is money? A lawyer’s perspective on the evolution of the US payment system and dollars in the digital age
This paper analyses the current frictions, and opportunities for evolution, in the US dollar payment system, by viewing money through the lens of network effects, interoperability, and their legal underpinnings. It gives a lawyer’s perspective on the workings of the US payment system and lessons from history, including the free banking era. This paper also discusses current developments, such as various central bank digital currency proposals and private sector stablecoin developments, in this context. The goal is to contribute to the discussion around the future of the US payment system, toward greater efficiency that does not risk introducing instability.
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Jess Cheng is senior counsel at the Federal Reserve Board of Governors. She was formerly counsel at the International Monetary Fund, deputy general counsel at Ripple, counsel and officer at the Federal Reserve Bank of New York, and an associate at the New York law firm Wachtell, Lipton, Rosen & Katz.
Joseph Torregrossa is Associate General Counsel and Vice President at the Federal Reserve Bank of New York.