At least three Federal Reserve governors have said they see no reason for the Fed to issue a central bank digital currency (CBDC). The Fed is currently putting together a report on a digital dollar to be released in the near future.
Fed governors doubt need for digital dollar
Federal Reserve Governor Michelle Bowman said last week that she didn’t really see a reason for the Fed to issue a US central bank digital currency given the security and efficiency of the US payments system. . She said:
I’m not really sure that I understand or see the business case for creating it.
The Fed is currently preparing a report on the pros and cons of issuing a digital dollar. The report is expected to be released soon.
Another Federal Reserve governor who is skeptical about the Fed issuing a digital dollar is Randal Quarles. He said on October 20 at a Milken Institute conference that he did not understand the arguments for issuing a central bank digital currency. Quarles, who is due to step down in December, 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 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 firms in a way that allows them to circumvent the banking system? That is what a CBDC account is doing,” Waller said. “So, should we compete with the banking system or not? In August, the Fed governor noted:
I remain skeptical that a Federal Reserve CBDC would solve any major problem confronting the U.S. payment system.
