September 21, 2021

Digital Currency Is a Divided Issue at the Federal Reserve

“I just, I can’t wrap my head around that,” she said. “That just doesn’t sound like a sustainable future to me.”

Mr. Waller, by contrast, suggested that there is little a central bank digital offering could do that the private sector cannot and that the potential benefits of a digital dollar are likely overstated, while the risks are substantial. He added that the United States need not worry about the U.S. dollar being supplanted by China’s digital offering.

“I am left with the conclusion that a C.B.D.C. remains a solution in search of a problem,” Mr. Waller said on Thursday, referring to a central bank digital currency. He also voiced concerns that a central bank currency would give the Fed too much information about private citizens.

Mr. Waller is not alone in his skepticism. Randal K. Quarles, the Fed’s vice chair for supervision, has also sounded dubious about the need for a central bank digital currency, painting the idea as a passing fad. Jerome H. Powell, the Fed chair, has at times questioned whether such an offering is necessary, but he has more recently stressed that it is important to investigate the idea and has called himself “legitimately undecided.”

Supporters of central bank digital currency say that it is critical for the United States to stay on top of the technology, even if it is not yet clear what benefits such currencies will offer in practice. Some suggest that a Fed digital dollar could prevent stablecoins — private digital assets backed by a bundle of currencies or other assets — from becoming dominant and creating a big financial stability risk.

Article source:

Speak Your Mind