The United States has been dragging its feet in launching a central bank digital currency (CBDC). The US Federal Reserve Board governor, Christopher Waller, has now said that a digital dollar will not improve the qualities of a US Fiat dollar that foreign entities value.
Digital dollar will not enhance the qualities of a US fiat dollar
In a speech on October 14, Waller, who is quite skeptical about CBDCs, said he supported having a dollar-backed stablecoin. Waller said that the primary nature of the US dollar made it beneficial to the US and the other countries where the country was used as a reserve currency.
He added that the primary nature of the US dollar was not because of technological factors. Therefore, launching a US CBDC would not affect why the US dollar was adopted. He also dismissed claims that the shifting payments sector, because of the growing use of digital assets and CBDCs, would threaten the status of the US dollar.
Waller said there was a possibility that foreign CBDCs could make gains against the US dollar as a means of transaction. However, no changes could be seen in the domestic market.
A US CBDC is unlikely to dramatically reshape the liquidity or depth of US capital markets. It is unlikely to affect the openness of the US economy, reconfigure trust in US institutions, or deepen America’s commitment to the rule of law.
Waller’s views on stablecoins
Waller has also dismissed allegations that stablecoins could threaten the economic policy. He said that most of the major stablecoins were denominated by the US dollar. He added that US monetary policies could affect the decision to hold stablecoins in the same way as holding the US currency. This extended the economic influence of the US.
Waller has made his arguments using his personal and scholarly opinion. He has also added that the factors that drove the role of the US dollar as a reserve currency were well-demonstrated and well-researched.
In one of his personal opinions, Waller said he was skeptical that a CBDC could cause friction in traditional payments. He further added that the large issuance of a stablecoin could only have a marginal effect on the role of the US dollar.
Waller has also added that he was open to the arguments that others had made regarding the space. He further reiterated his position on stablecoins and CBDCs as he has done before. His recent views on a US CBDC are the same as those he has expressed in the past.
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