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Coronavirus pandemic could trigger a digital currency race

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.

Supreme Court backs religious groups on New York coronavirus restrictions

The U.S. Supreme Court ruled late Wednesday that restrictions imposed on New York places of worship by Gov. Andrew Cuomo (D) during the coronavirus pandemic violated the First Amendment, per Bloomberg.

Why it matters: The decision in a 5-4 vote heralds one of the first significant actions by the new President Trump-appointed conservative Justice Amy Coney Barrett, who cast the deciding vote in favor of the Catholic Church and Orthodox Jewish synagogues.

Editor's note: This a breaking news story. Please check back for updates.

Trump agency head who often skips mask tests positive for coronavirus

The acting administrator of the United States Agency for International Development informed senior staff Wednesday he has tested positive for coronavirus, two sources familiar with the call tell Axios.

Why it matters: John Barsa, who staffers say rarely wears a mask in their office, is the latest in a series of top administration officials to contract the virus. His positive diagnosis comes amid broader turmoil at the agency following the election.

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COVID-19 shows a bright future for vaccines

Promising results from COVID-19 vaccine trials offer hope not just that the pandemic could be ended sooner than expected, but that medicine itself may have a powerful new weapon.

Why it matters: Vaccines are, in the words of one expert, "the single most life-saving innovation ever," but progress had slowed in recent years. New gene-based technology that sped the arrival of the COVID vaccine will boost the overall field, and could even extend to mass killers like cancer.

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Beware a Thanksgiving mirage

Don't be surprised if COVID metrics plunge over the next few days, only to spike next week.

Why it matters: The COVID Tracking Project warns of a "double-weekend pattern" on Thanksgiving — where the usual weekend backlog of data is tacked on to a holiday.

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Trump pardons Michael Flynn

President Trump on Wednesday pardoned his former national security adviser Michael Flynn, who pleaded guilty in December 2017 to lying to the FBI about his Russian contacts.

Why it matters: It is the first of multiple pardons expected in the coming weeks, as Axios scooped last night.

This is a breaking story and will be updated with more details.

The emerging cybersecurity headaches awaiting Biden

The incoming administration will face a slew of cybersecurity-related challenges, as Joe Biden takes office under a very different environment than existed when he was last in the White House as vice president.

The big picture: President-elect Biden's top cybersecurity and national security advisers will have to wrestle with the ascendancy of new adversaries and cyberpowers, as well as figure out whether to continue the more aggressive stance the Trump administration has taken in cyberspace.

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Past friction between Biden and Erdoğan foreshadows future tensions

Ankara — The incoming Biden administration's foreign policy priorities and worldview will collide with those of the Turkish government on several issues.

Why it matters: The U.S. needs its NATO ally Turkey for its efforts to contain Russia, counter Iran and deal with other crises in the Middle East. But relations between Biden and Turkish President Recep Tayyip Erdoğan are expected to be strained.

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Tesla's wild rise and European plan

Data: FactSet; Chart: Axios Visuals

Tesla's market capitalization blew past $500 billion for the first time Tuesday.

Why it matters: It's just a number, but kind of a wild one. Consider, via CNN: "Tesla is now worth more than the combined market value of most of the world's major automakers: Toyota, Volkswagen, GM, Ford, Fiat Chrysler and its merger partner PSA Group."

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