Federal Reserve Governor Questions Need for CBDC
Federal Reserve Governor Michelle Bowman expressed skepticism about the necessity of a U.S. central bank digital currency (CBDC). She stated that she has not seen a compelling argument that a CBDC would solve issues that other alternatives couldn’t address. Bowman made these comments during a roundtable hosted by Harvard Law School.
Bowman acknowledged the importance of financial inclusion and addressing frictions within the payment system, but she believes that these goals can be achieved through other means. She mentioned FedNow, a service launched by the Federal Reserve over the summer, as one such alternative. FedNow enables financial institutions to send and receive instant payments in real time, reducing transaction settlement times.
While acknowledging that other countries are exploring CBDCs, Bowman emphasized the need for continued research rather than immediate development. She also criticized stablecoins, stating that they could pose risks to consumers and the U.S. banking system.
Hot Take: Is a CBDC Necessary?
Federal Reserve Governor Michelle Bowman’s skepticism about the need for a U.S. central bank digital currency raises important questions. While arguments in favor of a CBDC include financial inclusion and improved payment systems, Bowman argues that these goals can be achieved through existing alternatives like FedNow. As other countries continue to explore CBDCs, it is crucial for ongoing research to inform any potential decisions regarding the adoption of a CBDC in the United States.
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