Three Federal Reserve Governors stated that there is no reason why the Fed should issue digital currencies (CBDC) for central banks. The Fed is currently compiling a report regarding a digital dollars that will soon be made public.
Fed Governors Do Not Believe Digital Dollar is Needed
Michelle Bowman, Federal Reserve Governor, stated last week that there is no reason why the Fed should issue U.S. central banks digital currencies given the security and efficiency of U.S. payments. According to her,
I’m not really sure that I understand or see the business case for creating it.
The Fed is currently working on a report that will discuss the benefits and drawbacks of issuing digital dollars. This report should be available soon.
Randal Quarles is another Federal Reserve Governor who remains skeptical over the Fed issuing an electronic dollar. On Oct. 20, Randal Quarles stated at the Milken Institute that he did not fully understand the reasons for issuing digital currencies by central banks. Quarles said:
Until somebody answers me the question why, I don’t understand why we would devote the enormous amount of resources and the technological risk and the significant disruption to the current operation of the financial system that would come from the central bank saying we are going to provide this digital currency.
Federal Reserve Governor Christopher Waller doubts that the Fed should issue digital dollars. In October, he explained that the Fed would be in direct competition against commercial banks if it issued a digital currency.
“With a central bank digital currency, you’re asking a very direct question. Is the central bank more responsible for processing payments to households and businesses in a manner that permits them to bypass the banking system? That is what a CBDC account is doing,” Waller said. “So, should you compete with the banking system or not?” In August, the Fed governor noted:
It is doubtful that the Federal Reserve CBDC will solve all major problems in America’s payment system.
Is the Fed obligated to issue CBDC (central bank digital currency)? Leave your comments below.
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