A U.S. central bank digital currency (CBDC) will not improve the quality of the U.S. fiat dollar, which is most valued by foreign companies, U.S. Federal Reserve Governor Christopher Waller said in a speech released Oct. 14. CBDC skeptic Waller looked at the issue through a national security lens at a symposium at Harvard University. Waller had a more favorable opinion of the dollar-backed stablecoin.
The role of the US dollar around the world is an area where economics, CBDCs, and national security intertwine, Waller said. The undeniable primacy of the US dollar in the world is beneficial to the US and other countries where the dollar plays a role in their economy or as a reserve currency.
Just now: Fed Chairman Christopher Waller’s New Speech – Digital Currencies for the US Dollar and the Central Bank
— Brian Laverdure, AAP (@brian_laverdure) October 14, 2022
According to Waller, this priority is not related to technological factors, and therefore the introduction of the American CBDC will not affect the reasons for this priority. He expressed doubt that the “perceived change in the payment landscape as a result of the growth of digital assets, especially CBDCs” poses a threat to the US dollar’s status as a global medium of exchange or store of value, although foreign CBDCs may gain against the dollar as transaction tool.
On the rear:
“A US CBDC is unlikely to fundamentally change the liquidity or depth of US capital markets. It is unlikely to affect the opening up of the US economy, reconfigure trust in US institutions, or strengthen America’s commitment to the rule of law.”
According to Waller, this contrasts with the role of a stablecoin. He dismissed suggestions that stablecoins could threaten the effectiveness of economic policy with a simple statement: “I don’t think that’s the case.” Noting that “nearly all major stablecoins” are denominated in dollars, Waller concluded that “U.S. monetary policy should influence the decision to hold stablecoins just as much as the decision to hold the [U.S.] currency.” Presumably, this will expand the economic influence of the United States.