Fed governor doubts whether to issue a digital dollar

August 7, 2021


Fed governor doubts whether to issue a digital dollar

The US authorities should only launch CBDC in the event of a significant market disruption. This opinion was presented by Chris Waller, a member of the US Federal Reserve Board of Governors, in an interview with the American Enterprise Institute.

The official expressed scepticism about the ability of the digital dollar to become an answer to the current challenges of payment systems. Waller stressed that the problems can be solved effectively and quickly through other options.

"The private sector is already developing cheaper and faster payment alternatives to their banking counterparts. The Fed does not necessarily need to set up a CBDC for the same purpose," the manager explained.

Waller noted that CBDCs would not solve the problem of improving financial inclusion either, but would raise privacy concerns. In support of the position, they cited FDIC data - only 1% of households were unbanked in the US in 2019.

According to the official, stablenecoins raise legal, regulatory and supervisory issues. These need to be resolved before stablecoins can become widespread. Waller recalled the forthcoming report of the US President's Working Group on Financial Markets.

A Fed spokesman pointed out that the CBDC design involves the Central Bank accessing a "huge amount of information" about account holders. This is both a target for hackers and comparisons to China, which controls its citizens through digital yuan transactions, he added.

As a reminder, it was previously reported that staff at the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology will complete work on a digital dollar prototype by July. Central Bank Governor Jerome Powell has pushed that deadline back to late summer 2021.

The Fed began exploring the possibility of issuing a CBDC in February 2020. The development of a digital dollar was announced in August 2020.

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