Fed governor criticizes the idea of launching the digital dollar

Chris Waller said that the US CBDC will not strengthen the dollar’s position on the world stage

17.10.2022 - 13:40

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What’s new? During a speech at Harvard University, Chris Waller, a member of the Board of Governors of the US Federal Reserve System (Fed), said that the launch of a national digital currency (CBDC) will not strengthen the dollar’s position on the world stage. According to him, the asset by itself will not be able to sufficiently reduce traditional problems to prevent fraud, theft, money laundering, or terrorist financing.

Waller’s speech

What else did Waller say? The Fed governor noted that digital currency systems can automate a number of processes that partially solve money laundering and terrorist financing problems, but they are not unique in that. Attempts are being made internationally to improve cross-border payments, he said, with the vast majority of those improvements coming not from CBDCs, but from improvements to existing payment systems. He added:

“A US CBDC is unlikely to dramatically reshape the liquidity or depth of US capital markets. It is unlikely to affect the openness of the US economy, reconfigure trust in U.S. institutions, or deepen America’s commitment to the rule of law. As I have said before, the introduction of a US CBDC would come with a number of costs and risks, including cyber risk and the threat of disintermediating commercial banks, both of which could harm, rather than help, the US dollar’s standing internationally.”

Michael Saylor, former head of MicroStrategy, previously said that central bank digital currencies are unstable and doomed to fail. In his opinion, bitcoin could become a better form of money due to the fact that it is a scarce asset.

In May, Circle, the issuer of the USDC stablecoin, urged the Fed to abandon the issue of the digital dollar because it could slow the development of new technologies and negatively affect the private sector of stablecoins. The regulator began studying the advantages of CBDC for payment systems back in April.

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