Federal Reserve Official Cautious About U.S. CBDC, Cites Private Sector Solutions
In a speech at Harvard Law School, Federal Reserve Governor Michelle Bowman expressed her skepticism about the necessity of a U.S. central bank digital currency (CBDC).
She argued that the case for a CBDC remains unconvincing, failing to demonstrate how it could address identified issues more effectively or efficiently than existing alternatives. Bowman highlighted that private sector innovations, such as instant payments, might better resolve payment system frictions and promote financial inclusion. She cited the Fednow instant payment system as an example of existing infrastructure improvements.
Moreover, Bowman cautioned that CBDCs come with significant risks, including potential disruptions to the traditional banking system and consumer and business harm if not properly designed. She emphasized the need for more research on CBDCs and continued monitoring of international developments, but stressed the high bar for adopting a digital currency in the U.S. due to associated risks. According to Bowman, the potential benefits of a U.S. CBDC remain unclear.
Clever Robot News Desk 19th October 2023
