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Illustration: Aïda Amer/Axios

China is moving ahead "rapidly" with its version of a central bank-issued digital currency and the Fed looks to be prioritizing development and moving forward with urgency to produce one in the U.S. as well.

Why it matters: Digital currencies would provide a number of new policy tools to help stimulate the economy, including allowing Congress to send money more quickly and efficiently to Americans or facilitating direct transmissions from the Fed to consumers.

What's happening: Spending patterns by the unemployed and others who received funds through the CARES Act and private company progress on digital currencies "has intensified calls for [central bank digital currencies] CBDCs to maintain the sovereign currency as the anchor of the nation's payment systems," Fed governor Lael Brainard said in a speech earlier this month.

  • "Moreover, China has moved ahead rapidly on its version of a CBDC."

Watch this space: Separate House and Senate bills have emerged this year proposing the creation of digital currencies.

The big picture: Congress' inability to pass additional economic stimulus could put more pressure on the Fed to hold up the economy, and its current tools are ill-suited to do so.

  • The Fed's Main Street Lending Program, its most high-profile effort to directly help individual Americans and smaller businesses, has provided less than one half of 1% of its $600 billion mandate.
  • The growing talk of the K-shaped recession in the U.S. has led to concerns that the Fed is driving income and wealth inequality, and even prompted a Senate bill to give the Fed a third mandate to reduce inequality.

The intrigue: A digital currency could also help the Fed implement monetary policy by setting interest rates on consumers' accounts holding the digital currency — analysts say this also could be a more efficient way for the Fed to institute negative interest rates to boost consumption and inflation.

Between the lines: China already is far ahead of the U.S. and much of the developed world in mobile payments, and a new digital currency could provide another avenue to challenge the dollar's supremacy as the world's funding currency.

What's next: The Fed could provide some hints on the next steps in developing a digital currency at its annual Jackson Hole Symposium, which is set to kickoff virtually on Thursday.

Go deeper

Mnuchin's plan to shift unspent Fed funds

Illustration: Aïda Amer/Axios

A move by Treasury Secretary Steven Mnuchin could handcuff his likely successor Janet Yellen's ability to immediately restart Fed economic programs.

Driving the news: Mnuchin is planning to shift $455 billion in unspent CARES Act funds into a special account that would require Congress' permission to access, Bloomberg reports.

Trump says he plans to launch new social media network in 2022

Photo: Chris Delmas/AFP via Getty Images

Former President Trump on Wednesday announced plans to launch a social media network called "Truth Social," and that it would go public via a SPAC.

Why it matters: Most ex-presidents are focused on their legacies, by creating presidential libraries or engaging in philanthropic endeavors. Trump, however, remains consumed by social media.

Beauty giant Coty Cosmetics looking to sell its own branded products

Coty Cosmetics CEO Sue Nabi. Photo: Axios on HBO

Coty Cosmetics CEO Sue Nabi tells Axios the beauty giant will “probably” introduce Coty-branded products one day.

Why it matters: Coty produces some of the world’s most popular fragrances, skin care products and color cosmetics on behalf of other well-known brands, but has shied away from producing its own branded products.