Feds’ Bowman Dampens Hope of a US-backed CBDC in the Future
Federal Reserve Governor Michelle Bowman believed that implementing U.S. central bank digital currency (CBDC) could pose significant risks and tradeoffs for the country’s economic system.
The Fed’s Governor announced this at the Harvard Law School event in Washington on October 17.
Bowman highlighted that there had been no compelling arguments that CBDC could solve financial frictions within the payment system than available alternatives.
The Federal Reserve recently launched FedNow, an instant payment option to simplify payments for U.S. residents.
Bowman stated that FedNow is the best alternative as it is designed to make daily payments faster and allow users to receive funds with same-day access.
She stated that the payment solution has enabled small businesses to manage cash flows without delays and implored future innovations to build upon these services to address financial inclusions effectively.
Meanwhile, Bowman brought stablecoins to the discourse. She argued that while the Fed supports responsible financial innovations that benefit consumers, stablecoins could pose risks to investors and the broader U.S. banking system.
The Fed’s boss backed her claim by stressing that stablecoins are supposed to have convertibility one-for-one with the dollar.
However, recent occurrences have shown the asset to fall short of security, stability, and regulation than conventional forms of money.
A board member of the Federal Reserve, Christopher Waller, has stated that there is “nothing revolutionary” about the U.S. integrating a digital dollar over the already functional traditional banking system.
The statement was made at an event hosted by the Brookings Institution Falk Auditorium on October 6.
The event was themed “Making
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