Federal Reserve Governor Sees No Compelling Need for a CBDC
- Federal Reserve Governor Michelle Bowman said that she sees no usage for a CBDC in the US.
- She said that there are other alternatives that would provide the same benefits as a CBDC.
- Bowman noted that FedNow is easily capable of solving all the challenges in the existing financial structure.
- She also noted that stablecoins pose significant risks for investors and the US banking system.
Michelle Bowman, the Governor of Federal Research, said in a recent statement that she sees no compelling need for a central bank digital currency (CBDC) in the United States. Interestingly, she noted that there are other alternatives that could solve many issues that persist in the current traditional financial industry.
According to the Federal Reserve governor, the benefits of a CBDC cited by many backers, including financial inclusion and reducing frictions within the payment system, are not exclusive to CBDCs. Bowman claims that there are other alternatives that will provide similar benefits as those of a digital blockchain-based dollar.
“These are all important issues. I have yet to see a compelling argument that a U.S. CBDC could solve any of these problems more effectively or efficiently than alternatives, or with fewer downside risks for consumers and for the economy,” Bowman said.
During a speech Tuesday at a roundtable hosted by Harvard Law School, Bowman stated that the Federal Reserve’s FedNow and other solutions could solve those challenges. FedNow debuted earlier this year and allows financial institutions to send and receive instant payments in real time, which reduces the transaction time by a significant margin.
Bowman noted that FedNow has been designed to make “everyday payments faster and more convenient, allowing consumers to instantly receive funds with same-day access and enabling small businesses to more efficiently manage cash flows without processing delays,” while adding:
“Future innovations may further build upon these services to more effectively address payment systems frictions and financial inclusion.”
As reported earlier by Btination, Majority Whip of the United States House of Representatives Tom Emmer, along with 49 initial co-sponsors, has reintroduced legislation designed to prevent non-elected officials in Washington from creating a digital dollar.
The Federal Reserve governor also talked about stablecoins in his speech. According to Bowman, stablecoins “in practice have been less secure, less stable, and less regulated than traditional forms of money.” She believes that if used as a payment method, stablecoins could pose significant risks to the US banking system.
Bowman noted that the regulated traditional finance industry offers protection, and if transactions happen outside the regulatory purview, investors and their money will remain under continued risk.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
