Fed governor doubts the advisability of issuing a digital dollar

The United States authorities should launch CBDC only in the event of a significant market disruption. This view was expressed by Federal Reserve Board member Chris Waller in an interview with the American Enterprise Institute.

The official expressed scepticism about the ability of a digital dollar to address the current challenges facing payment systems. Waller emphasised that the problems could be solved effectively and promptly through other options.

“The private sector is already developing cheaper and faster payment alternatives compared with those available in the banking system. The Fed does not necessarily need to create a CBDC for this same purpose,” the governor explained.

Waller noted that CBDC would not solve the problem of improving financial inclusion, but would raise concerns about privacy. To support the position he cited the FDIC data — in 2019, only 1% of households in the United States were not covered by banking services.

In the official’s view, stablecoins raise legal, regulatory and supervisory questions. They must be addressed before stablecoins gain traction. FDIC data shows that in 2019 only 1% of households were not served by banking services.

The Fed official noted that CBDC design envisions the central bank’s access to “a huge amount of information” about account holders. This is both a target for hackers and a point of comparison with China, which controls its citizens through transactions with the digital yuan, he added.

As previously reported, staff at the Federal Reserve Bank of Boston and MIT completed work on creating a prototype of the digital dollar by July. Fed Chair Jerome Powell pushed back this deadline to the end of summer 2021.

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

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