A reserve bank digital currency is unneeded in the U.S. and would provide inappropriate threats and expenses to the monetary system, the American Bankers Association stated today in a declaration to the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion. The subcommittee will hold a hearing Thursday on the results of CBDC adoption and possible economic sector options to the currency. In its remarks, ABA kept in mind the dollar is currently digital, and it is uncertain how releasing a CBDC would enhance monetary addition or accomplish the other admirable objectives of its advocates.
“On the other hand, issuance of a CBDC would fundamentally change the relationship between citizens and the Federal Reserve, undermine the important role banks play in financial intermediation, exacerbate economic and liquidity crises, and impede the transmission of sound monetary policy,” ABA stated.
ABA included that there are possible options, such as a wholesale CBDC just recently discussed by Fed Governor Michelle Bowman, which might be utilized in the settlement of particular monetary market deals and for processing worldwide payments. The idea “should be carefully evaluated before moving forward with a CBDC,” the association stated.