Federal Reserve Bank Governor Michelle Bowman gives her first public remarks as a Federal policymaker at an American Bankers Association conference In San Diego, California, February 11 2019.
Ann Saphir | Reuters
Federal Reserve Governor Michelle Bowman expressed skepticism over the possibility of a digital U.S. dollar, noting Tuesday the multiple risks such a system could impose.
A central bank digital currency (CBDC) could intrude on the privacy of users and harm the banking system while providing few benefits that aren’t otherwise available for banked and unbanked consumers alike, Bowman said in a speech.
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“We must ensure that consumer data privacy protections embedded in today’s payment systems continue and are extended into future systems,” she said in prepared remarks at Georgetown University.
Bowman further noted “the risk that a CBDC would provide not only a window into, but potentially an impediment to, the freedom Americans enjoy in choosing how money and resources are used and invested.”
For the past few years, Fed officials have been studying whether to join a handful of other central banks to implement its own type of cryptocurrency. A study released in 2022 detailed the various pros and cons but didn’t take a stance.
In her remarks, Bowman addressed most of the common arguments — in particular, the opportunities a CBDC could present for those without access to traditional banking activities, and the importance of catching up to the Fed’s global counterparts that have already implemented digital currencies. The People’s Bank of China, for instance, has its own product in place.
However, the speech mostly noted counterarguments. For instance, she said fewer than 5% of U.S. households are without a checking or savings account, and most of that group is voluntarily unbanked.
“Approximately one-third cited a lack of trust in banks as the reason for not having a bank account,” Bowman said. “I think it is unlikely that this group would find…
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