US Federal Reserve Governor Michelle Bowman expressed uncertainty over the need for a central bank digital currency (CBDC) in remarks on Tuesday. She stated that the potential benefits of a digital dollar remain unclear.
The Fed is currently researching CBDCs but would require government backing to actually issue one. Some Republican lawmakers have introduced bills to prohibit the move.
According to Bowman, arguments around a CBDC addressing payment friction, financial inclusion, and providing public access to central bank money have not been compelling. She believes existing and upcoming Fed payment systems may solve these problems more effectively than a new digital currency.
FED Governor Michelle Bowman cited the potential risks of CBDC
Bowman also cited potential downside risks to consumers and the economy. In the Fed Governor’s view, other solutions could meet any needs a CBDC aims to fill in a more efficient way.
Additionally, the governor flagged risks from private stablecoins used heavily in crypto markets. She suggested these assets are less secure, stable, and regulated compared to traditional money.
Bowman advocated for imposing stricter bank-like regulation on stablecoin issuers versus exploring a Fed-backed digital currency.
Her remarks illustrate ongoing internal debates over a potential digital dollar. While research continues, key Fed officials remain unconvinced of the need for this major policy shift given other payment innovations on the horizon.