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Like most central banks around the world, the Federal Reserve does not provide deposit accounts...

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Finance

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Like most central banks around the world, the Federal Reserve does not provide deposit accounts for individuals. Suppose the Fed decided to issue digital currency by offering unlimited access to interest-paying deposit accounts for individuals. What problems might this cause for the financial system? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the option once to place a check mark. For incorrect answer(s), click the option twice to empty the box. The central bank will face pressure to direct credit as well as money and interest rates. The central bank would not add the compliance measures necessary to prevent illegal activities potentially aided by the change in finance. Commercial banks will have difficulty funding illiquid loans, like mortgages, because deposits will decrease. The central bank would face pressure to let state banks decide credit, resulting in a loss of some control over fiscal policy. There will likely be strong demand on central bank direct deposits, increasing the risk that small disturbances in the economy will cause commercial bank runs

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