Those who have been following the activities around CBDCs will know that in certain markets there are quickly advancing trials underway with expectations around general CBDC issuance as soon as 2022 (China), but in other markets (USA, EU) the approach is a more conservative, study-and-discuss type of thing.
This posting in Finextra is a summary of comments made in a speech by a Fed official, essentially reinforcing this approach and providing a level of skepticism at the central bank about CBDCs. Members will have been following this space through research and other postings.
“The Federal Reserve’s supervision chief has become the latest central bank bigwig to weigh in on CBDCs, comparing them to the parachute pants made famous in the 1980s by MC Hammer – a fad that could in future seem embarrassing….With some countries, most notably China, forging ahead with their CBDC plans, in May Fed chair Jerome Powell opened up the digital dollar debate, promising a ‘thoughtful and deliberative process’.…However, in a speech this week, vice chair for supervision at the bank, Randal Quarles, made clear that he thinks any US CBDC plan will need to clear a high bar to prove its value.“
The piece goes on to present the official’s views on the main objections and risks involved, which does not include any of the potential benefits, since that was not the gist of the speech. So those expecting a breakthrough in U.S. CBDC issuance, similar to what is underway in China and Sweden, will likely not see anything substantial happening for some time.
The U.S. continues to collaborate with BIS and undergo some other studies.
“Concludes Quarles: ‘So, our work is cut out for us as we proceed to rigorously evaluate the case for developing a Federal Reserve CBDC. Even if other central banks issue successful CBDCs, we cannot assume that the Federal Reserve should issue a CBDC.…The process that Chair Powell recently announced is a genuinely open process without a foregone conclusion, although obviously, I think the bar to establishing a US CBDC is a high one.‘”
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group