For years now, the hot trend among the world's central banks has been to explore the creation of a central bank digital currency (CBDC). Yesterday, a top U.S. Treasury official said the government is studying the question closely.

• But in practical terms, the possibility the United States will join the digital currency movement is looking more distant than ever.

Why it matters: The dollar is the bedrock of the world financial system, and decisions by U.S. officials on how much to test the digital dollar waters now could have massive downstream implications for both global financial stability and future U.S. financial power.

• Meanwhile, there is not much of a constituency in Washington for Federal Reserve-issued digital dollars, and the banking industry would fight many forms of it tooth and nail.

Driving the news: At the Atlantic Council, Treasury undersecretary Nellie Liang spelled out the Biden administration's approach. While deliberations are ongoing, Liang's remarks showed how many obstacles stand in the way.

• She noted that the Fed has "emphasized that it would only issue a CBDC with the support of the executive branch and Congress, and more broadly the public." In other words, this would only happen with broad bipartisan consensus, which is hard to find about anything.

Moreover, the implosion of many cryptocurrencies has undermined one of the cases for a CBDC; namely, that crypto-based stablecoins would create walled gardens of private financial networks that expose savers to undisclosed risk and enable illegal activity.

Of note: As the No. 2 Fed official, Lael Brainard was perhaps the central banker with the most enthusiasm for a digital currency. While she's gone from the Fed, she is now the top White House economic adviser and is a potential successor to Treasury secretary Janet Yellen.

The bottom line: The case for a dollar-based CBDC relies on long-term geostrategic thinking. The case against it is built on practical problems, and questions that officials may struggle to solve.

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There's more data from the end of 2022 that points to a tight labor market and continued inflation pressure.

• Unit labor costs — or how much a business pays workers for a single unit of output — rose at a 3.2% annualized rate in the final quarter of last year, according to revisions released by the Labor Department. That came, in part, because of a downward revision in worker productivity.
• Unit labor costs rose much faster than the initially reported 1.1%, but the rate of increase slowed consistently throughout 2022. In the first quarter of the year, for instance, unit labor costs rose at an 8.5% annualized pace.

Between the lines: The numbers reflect both labor measurements (wages, and how many hours were worked) and the nation's economic output.

• In the first half of the year, economic growth was sluggish — even alongside a booming labor market — resulting in ugly productivity and labor costs.
• But that flipped some in the second half. GDP rebounded and some steam came out of the labor market, helping lift the productivity figures.

The Q4 jump in unit labor costs reflects a nearly 5% annualized bump in hourly pay, alongside a 1.7% gain in worker productivity.

• Productivity was revised down 1.3 percentage points below the initial estimate.

The bottom line: For the full year, unit labor costs rose 6.6% — rather than the 5.7% initially reported — highlighting the slightly more worrying inflation backdrop. That figure was 2.6% in 2021.