A US central bank digital currency (CBDC) would not improve the qualities of the current US dollar that are most valued by foreign companies, US Federal Reserve Board Governor Christopher Waller said in a published speech. on October 14. Skeptical of CBDC, Waller discussed the issue from a national security standpoint at a symposium held at Harvard University. Waller had a more favorable view of the dollar-backed stablecoin.
The role of the US dollar around the world is one area where the economy, CBDCs and national security all fit together, Waller said. The undisputed primacy of the US dollar in the world brings benefits to the United States and to other countries where the dollar plays a role in their economies or as a reserve currency.
Just in: New speech Fed Gov. Christopher Waller – The US Dollar and Central Bank Digital Currencies#CBDC #communitybanks #payments #stablecoins #centralbank https://t.co/MgpbBUw3j7 via @FederalReserve pic.twitter.com/wao6tEwL2n
— Brian Laverdure, AAP (@brian_laverdure) October 14, 2022
This primacy is not due to technological factors, so the introduction of a US CBDC would not affect the reasons for that primacy, Waller argued. He expressed his doubts that “the supposed change in the payments landscape as a result of the growth of digital assets, in particular of CBDCs” is a threat to the status of the US dollar in the world that makes settlements or stores value, although foreign CBDCs could earn against the dollar as a medium of transaction.
On the home front:
“A US CBDC is unlikely to drastically change the liquidity or depth of US capital markets. It is unlikely to affect the openness of the US economy, reshape confidence in US institutions, or deepen in America’s commitment to the rule of law.
This stands in contrast to the role of stablecoins, in Waller’s view. He dismissed suggestions that stablecoins could threaten the effectiveness of economic policy with the simple statement that “I don’t think so.” Noting that “nearly all major stablecoins” are denominated in dollars, Waller concluded that “US monetary policy should affect the decision to hold stablecoins similarly to the decision to hold currency.” [estadounidense]”. Presumably, this would expand the economic influence of the United States.
Waller included large doses of scholarship and opinion in his argument. For example, he stated that “the factors driving the dollar’s role as a reserve currency are well researched and demonstrated.” Other elements of his argument were of his own making. “I am highly skeptical that a CBDC alone can sufficiently reduce traditional payment frictions” Y “I’m not sure that even a large stablecoin issuance can have more than a marginal effect” on the role of the US dollar, said.
Waller also said: “I remain open to arguments made by others in this space.” He has stated his positions on CBDCs and stablecoins before, and has made other arguments against an American CBDC.
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