Federal Reserve Governor Christopher Waller recently expressed skepticism about the need for a central bank digital currency (CBDC) in the US payments system
Waller made the comments during a speech at the 2024 Clearing House Annual Conference on November 12, where he questioned whether the system has a problem that CBDCs could solve.
He stated:
“In a speech I gave in August 2021, I asked: what problem would a CBDC solve? In other words, what market failure or inefficiency calls for this specific intervention? In more than three years, I still haven’t heard a satisfactory answer about CBDC.”
Waller advocated market-driven solutions, highlighting the benefits of the private sector in promoting payment systems innovation through competition.
He emphasized that the private sector, motivated by profit and competition, often makes better decisions when determining which technologies are worth investing in and which may not meet consumer needs.
He further stated that until a clear need is identified that the private sector cannot meet, the role of government should remain supportive rather than directly competing with private innovation in payments.
Anti-CBDC Efforts
US lawmakers hold similar views to Waller and have generally opposed the idea of creating a CBDC, mainly due to concerns about privacy and financial freedom.
The US House of Representatives past the CBDC Anti-Surveillance State Act in May, which barred Federal Reserve banks from issuing digital currencies without congressional approval.
Patrick McHenry, the chairman of the House Financial Services Committee, supported the bill, officially known as HR 5403. He expressed concerns about CBDCs being a tool for financial supervision, citing China as an example.
The state of Louisiana, along with Governor Jeff Landry, has also promoted anti-CBDC legislation signature HB 488 in June to ban the creation of a state digital currency and prevent authorities from engaging in CBDC-related investigations by the Fed.
Meanwhile, North Carolina state lawmakers fallen over Governor Roy Cooper’s veto of a bill that would prevent the state from implementing a CBDC in September.
