- No compelling reason to introduce a U.S. CBDC – Christopher Waller
- Many countries are developing CBDCs
- Reasons that make the dollar the dominant currency have little to do with blockchains
Christopher Waller, a member of the U.S. Federal Reserve System’s board of governors, has stated that he opposes the creation of a digital dollar.
In a speech that he gave in front of a symposium that was held in Cambridge, Massachusetts, by the Harvard National Security Journal, Governor Waller said that he still doesn’t think the Fed needs to make a digital currency (CBDC) for the central bank of the United States.
The dollar is also the world’s predominant reserve currency
The governor offered several justifications for his reservations. He claims that technology has little to do with the fundamental reasons the dollar is the dominant currency.
Due to the robust funding markets, foreign exchange transactions, and invoicing in the United States, the dollar is the dominant currency.
Additionally, the dollar is the world’s most widely used reserve currency. The introduction of a CBDC will not have any effect on these fundamental causes.
He went on to say that these factors also make it unlikely that another sovereign currency will replace the dollar simply because it is issued as a digital asset.
He stated that he does not believe that the introduction of a CBDC would have any effect on the fundamental factors that contribute to the dominance of the dollar as a currency.
Could stablecoins be promoted by the Fed instead?
After the White House released a report on the technical possibilities of a digital dollar, Waller is giving a speech. The Federal Reserve hasn’t made a decision yet on a CBDC, despite releasing its discussion paper in January.
Waller, on the other hand, supports the use of stablecoins that are pegged to the dollar. He maintains that the availability of stablecoins pegged to the dollar for international payments may increase the dollar’s global dominance.
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What exactly is a CBDC?
Digital tokens similar to cryptocurrencies issued by a central bank are known as central bank digital currencies. They are tied to how much the country’s fiat currency is worth.
CBDCs are being developed and implemented in numerous nations.
It is important to know what fiat money is and what it means for society because so many countries are looking into how to move to digital currencies. Fiat money is money that is issued by the government and is not backed by a physical commodity like gold or silver.
It can be exchanged for goods and services and is regarded as legal tender. Technology has made it possible for governments and financial institutions to supplement physical fiat money with a credit-based model in which balances and transactions are recorded digitally. Previously, fiat money was represented by banknotes and coins.
It is still widely used and accepted to exchange physical currency; However, its use has decreased significantly in some developed nations, and this trend accelerated during the COVID-19 pandemic.
Interest in cashless societies and digital currencies has increased as a result of the introduction and development of cryptocurrencies and blockchain technology.
As a result, governments and central banks around the world are looking into using digital currencies that are backed by the government. Like fiat money, these currencies would have the full faith and support of the government that issued them when they are implemented.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
Source: https://www.thecoinrepublic.com/2022/10/19/digital-dollar-may-not-happen-soon/