Fed Governor Deems CBDC Unnecessary In The US

During a speech on Friday, Federal Reserve Governor Christopher Waller reaffirmed and expanded on his opposition to the notion of a Fed-issued digital currency.

Waller said in prepared remarks delivered at Harvard University:

“The factors supporting the primacy of the dollar are not technological, but include the ample supply and liquid market for U.S. Treasury securities and other debt and the long-standing stability of the U.S. economy and political system.

No other country is fully comparable with the United States on those fronts, and a CBDC would not change that.”

Waller went on to say that he is suspicious of CBDC backers’ claims that a digital dollar will handle fraud, theft, and money laundering or enhance payments more than existing technology. He said:

“Meaningful efforts are underway at the international level to improve cross-border payments in many ways, with the vast majority of these improvements coming not from CBDCs but improvements to existing payment systems.”

Waller also believes that because so many stablecoins are tied to the world’s main fiat currency, they will support rather than hurt the dollar. Because demand for stablecoins raises demand for dollar-denominated reserve assets held by the stablecoin issuer, the Fed governor suggested that they may strengthen rather than decrease the dollar’s supremacy overseas.

Waller echoed similar warnings from the Financial Stability Oversight Council, the American super committee of financial regulators, and the Financial Stability Board, an international advisory consortium for central bankers and other senior officials, in saying that the new payments technology must be risk-managed and subject to a robust supervisory and regulatory framework.

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Harold

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