Count Federal Reserve Gov. Christopher Waller as a continuing skeptic of a central bank digital currency (CBDC), but he is willing to talk about the payment channel, he told a group meeting at Harvard University Friday.
Offering his view, again, that he is highly skeptical of whether there is a compelling need for the Fed to create a digital currency, Waller did say “I am very happy to engage in vigorous debate regarding my view,” adding he remains “open to the arguments advanced by others in this space.”
But that’s about as far as he was willing to go. He told the “Digital Currencies and National Security Tradeoffs” symposium presented by the Harvard National Security Journal in Cambridge, Mass., that advocates for creating a U.S. CBDC “often assert how it is important to the long-term status of the dollar, particularly if other major jurisdictions adopt a CBDC.
“I disagree,” he said, adding that the underlying reasons for why the dollar is the dominant currency have little to do with technology, “and I believe the introduction of a CBDC would not affect those underlying reasons.”
Waller used several examples to explain his skepticism of CBDCs, which the Fed continues to study. One, he said, is whether a CBDC tends to promote the potential to reduce payment frictions by lowering transaction costs, enabling faster settlement speeds, and providing a better user experience.
“I am highly skeptical that a CBDC on its own could sufficiently reduce the traditional payment frictions to prevent things like fraud, theft, money laundering, or the financing of terrorism,” he said.
However, Waller indicated that discussion about a CBDC should focus less on issues related maintaining competitiveness with foreign CBDCs; and more about “salient” CBDC-related topics, like its effects on financial stability, payment system improvements, and financial inclusion.