Federal Reserve governor Christopher Waller is the latest central bank bigwig to pour cold water on CBDCs, declaring himself “highly sceptical” that there is a compelling need for a digital dollar.
With some countries, most notably China, forging ahead with their CBDC plans, in May Fed chair Jerome Powell opened up the digital dollar debate, promising a “thoughtful and deliberative process”.
However, in a speech at the American Enterprise Institute, Waller questioned the value of a CBDC: “After careful consideration, I am not convinced as of yet that a CBDC would solve any existing problem that is not being addressed more promptly and efficiently by other initiatives.”
Waller used his speech to dismiss many of the arguments for a digital dollar, including that that existing payments services are too slow, that it would replace physical cash, that it would boost financial inclusion, and that it would be cheaper to run.
He also warned against using a CBDC to gather more information on the financial transactions of citizens.
“The introduction of a CBDC in China, for example, likely will allow the Chinese government to more closely monitor the economic activity of its citizens. Should the Federal Reserve create a CBDC for the same reason? I, for one, do not think so.”
Not only would a CBDC not fix any pressing issues, Waller warns that it could cause some problems of its own, notably by disintermediating commercial banks and creating a new target for cyber threats.
Says the governor: “After exploring many possible problems that a CBDC could solve, I am left with the conclusion that a CBDC remains a solution in search of a problem.”
