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Federal Reserve Governor Christopher Waller explained in a symposium that a US central bank digital currency would not materially improve the Dollar’s position, and frictions that a CBDC might lessen could be achieved through other means.

Speaking at a symposium sponsored by the Harvard National Security Journal in Cambridge, Massachusetts on Friday, Waller said that though his views on CBDCs are “well known”. Waller is “highly sceptical of whether there is a compelling need for the Fed to create a digital currency.”

“Advocates for creating a U.S. CBDC often assert how it is important to the long-term status of the dollar, particularly if other major jurisdictions adopt a CBDC. I disagree,” Waller said. “The underlying reasons for why the dollar is the dominant currency have little to do with technology, and I believe the introduction of a CBDC would not affect those underlying reasons.”


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US-Dollar primacy is not related to technological factors, so the introduction of a US CBDC would not have any material effects in this regard, Waller argued. He hypothesised what could happen to the Dollar’s role as a reserve currency if other countries adopted a CBDC and the US did not develop a competing CBDC; in which case non-governmental intermediaries like bank-issued stablecoins (USDT, BUSD) would come to dominate the currency markets.

In all those scenarios, Waller said the factors that make the US Dollar attractive for holding value and conducting international business would remain mostly unchanged, and the frictions that a CBDC might lessen could be achieved through other means.

The dollar serves as a safe, stable, and dependable form of money around the world. It serves as a reliable common denominator for global trade and a dependable settlement instrument for cross-border payments. We should instead focus and debate the salient CBDC-related topics, like its effects on financial stability, payment system improvements and financial inclusion.

A US CBDC is unlikely to dramatically reshape the liquidity or depth of US capital markets. It would neither affect the openness of the US economy, nor reconfigure trust in US institutions or deepen America’s commitment to the rule of law, Waller highlighted.

Waller is far from alone as a sceptic of central bank digital currencies (CBDC). Minneapolis Fed President Neel Kashkari said in August that a digital currency would be a threat to personal privacy. Congressional Republicans recently asked the Department of Justice to clarify whether Congress or the Administration has the power to establish a digital currency.

The discussions about stablecoins and CBDCs are ongoing, and Waller underlined that “no decisions have been made” at the Fed. His remarks are intended to provide a free and open dialogue on the matter.


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