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At least three Fed governors stated that they believe that the Fed has no reason to issue a central bank digital currency (CBDC). The Federal Reserve is currently compiling a report on the digital dollar, which will be released in the near future.
Fed governor doubts the need for a digital dollar
Fed Governor Michel Bowman said last week that, given the security and efficiency of the U.S. payment system, she believes that the Fed does not have much reason to issue U.S. central bank digital currencies. she says:
I am not sure if I understand or see the business case for creating it.
The Federal Reserve is currently collating a report discussing the pros and cons of issuing digital dollars. The report is expected to be released soon.
Another Fed governor who is skeptical of the Fed’s issuance of digital dollars is Randal Quarles. He stated at a meeting of the Milken Institute on October 20 that he did not understand the arguments for the issuance of central bank digital currencies. Quarles, who will resign in December, believes:
Until someone answers my question why, I don’t understand why we will invest a lot of resources and technical risks and major damage to the current operation of the financial system, and the central bank said that we will provide this digital currency.
Fed governor Christopher Waller also doubted whether the Fed should issue a digital dollar. He explained in a discussion hosted by the Official Monetary and Financial Institutions Forum (OMFIF) in October that the digital dollar will put the Fed in direct competition with commercial banks.
“For central bank digital currencies, you are asking a very direct question. Should the central bank be more involved in processing payments from households and businesses so that they can bypass the banking system? This is what CBDC accounts are doing,” Wo Le said. “So, should you compete with the banking system?” In August, the Fed governor pointed out:
I still doubt whether the Federal Reserve CBDC can solve any major problems facing the U.S. payment system.
Do you think the Federal Reserve should issue central bank digital currency (CBDC)? Please let us know in the comments section below.
Image Source: Shutterstock, Pixabay, Wikimedia Commons
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