Federal Reserve Governor Christopher Waller on Friday expressed his hesitation towards the creation of a U.S. central bank digital currency, saying that the digital currency is likely not important to the long-term status of the U.S. dollar.
Waller made such comments while delivering a speech at a symposium sponsored by the Harvard National Security Journal in Cambridge, Massachusetts, on Friday.
The Fed governor said although his views on central bank digital currencies (CBDCs) are well known, he remains strongly unconvinced that there is a compelling need for the Fed to create a digital currency.
Waller said those who advocate for the development of a U.S. CBDC often say how it is significant for the long-term status of the dollar, especially as other major jurisdictions are moving towards adopting a CBDC.
He disagreed with such claims, stating that: “The underlying reasons for why the dollar is the dominant currency have little to do with technology, and I believe the introduction of a CBDC would not affect those underlying reasons.”
The Fed governor explained what could occur to the dollar’s role as the global reserve currency of choice if other countries adopted the digital currencies and the U.S. did not. He said factors making the dollar attractive for holding value and conducting international business would remain majorly unchanged, and the challenges that a CBDC might resolve could be achieved through other means.
Waller said: “The dollar serves as a safe, stable, and dependable form of money around the world. I don’t think there are implications here for the role of the United States in the global economy and financial system.” He, therefore, said people should instead focus and talk about the relevant CBDC-related topics, such as its impacts on financial stability, payment system improvements, and financial inclusion.
Waller’s comments come as a response to recent arguments posted by his fellow board members and other lawmakers favoring the introduction of a US CBDC.
In July, Fed Vice Chair Lael Brainard said a CBDC would be a “natural evolution” of the payments system, saying the digital currency could play a key role in protecting financial stability. Lawmakers like Rep. Jim Himes, D-Connecticut, have also been outspoken advocates for the establishment of a U.S. central bank digital currency.
The digital currency remains a hot topic for the US government. In March, President Joe Biden issued an executive order on digital assets. And based on the report, Biden wants the US to lead in a space that China is far more advanced in with its digital Yuan projects. But a digital dollar could take years to develop because different stakeholders see multiple problems with rolling out a digital currency from the Federal Reserve.
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