There is no reason for Federal Reserve governors to issue CBDCs

Federal Reserve Governor Michelle Bowman said last week that she doesn't see many reasons why the Fed should issue a US central bank digital currency given the security and efficiency of the US payment system. The Fed is currently putting together a report discussing the pros and cons of issuing a digital dollar. The report is expected to be released soon.

Another Federal Reserve governor who is skeptical of the Fed's issuance of a digital dollar is Randal Quarles. He told a Milken Institute conference on October 20 that he does not understand the arguments in favor of issuing a central bank digital currency. Quarles, who will step down in December, said: "Until someone answers the question why, I don't understand why we would have to devote the huge amount of resources and technological risk and the significant disruption of the current functioning of the financial system." .

Federal Reserve Governor Christopher Waller also doubts the Fed should issue a digital dollar. He explained in October during a discussion hosted by the Official Monetary and Financial Institutions Forum (OMFIF) that a digital dollar would put the Fed in direct competition with commercial banks.

“With a central bank digital currency, you are asking a very straightforward question. Should the central bank be more involved in processing payments for households and businesses in order to allow them to bypass the banking system? This is what a CBDC account is doing, ”Waller said. "So, should you compete with the banking system or not?" In August, the Fed governor had already remarked: "I remain skeptical that a Federal Reserve CBDC would solve any major problem facing the US payment system."

by Alessandro Crea

Thursday 18 November 2021 14:00


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