Federal Reserve governors see no reason to issue central bank digital currency – regulation

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 preparing a report on a digital dollar that will be released in the near future.

Fed governors doubt need for digital dollar

Federal Reserve Governor Michelle Bowman said last week that she doesn't see much reason for the Fed to issue a Federal Reserve digital currency given the security and efficiency of the US payments system. She said:

I'm not really sure I understand or see the business case for creating it.

The Fed is currently preparing a report discussing the pros and cons of issuing a digital dollar. The report is expected to be published shortly.

Another Federal Reserve governor who is skeptical about the Fed issuing a digital dollar is Randal Quarles. He said at a Milken Institute conference on Oct. 20 that he doesn't understand the arguments for issuing a central bank digital currency. Quarles, who will step down in December, said:

Until someone answers me the question of why, I don't understand why we would expend the enormous resources and the technological risk and the significant disruption to the ongoing operations of the financial system that would come from the central bank by saying that we are going to provide this digital currency.

US Federal Reserve Chairman Christopher Waller also doubts that 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're asking a very direct question. Should the central bank be more involved in processing payments for households and businesses so they can bypass the banking system? That's what a CBDC account does," Waller said. “So should you compete with the banking system or not?” In August, the Fed governor noted:

I remain skeptical that a Federal Reserve CBDC would solve every major problem facing the US payments system.

Do you think the Fed should issue a central bank digital currency (CBDC)? Let us know in the comments section below.

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