Do you need CBDC in the first place?
Federal Reserve Board of Governors (FRB) Vice-Chair Randal Quarles, who is in charge of financial regulation, expressed skepticism about the ideas of Central Bank Digital Currency (CBDC) supporters, saying that the benefits of introducing CBDC He said it is important to carefully analyze and consider cost and practicality.
Qualls, who spoke at the Utah Bankers Association’s annual meeting on June 28, warned that while the benefits of the CBDC are unclear, its introduction “may pose significant and clear risks.” It rang. The Fed says it will publish a research treatise on the CBDC this summer, and Mr. Qualls’ remarks have cast a stone in the debate.
Relation:US Fed to release discussion paper to consider digital dollar
Mr. Qualls is in a position that the Fed will first need to amend the law in order to introduce the CBDC. After that, he raised specific points and discussed the current state of the US payment system and the claims of CBDC advocates.
The dollar is already digitized
Qualls has already pointed out that most consumer bank accounts are settled in digital dollars by sending and receiving electronic balances. In other words, in the United States, “the Federal Reserve Bank provides digital dollars to commercial banks, and commercial banks provide digital dollars and other financial services to consumers and businesses.” “The dollar is already highly digital. It has been transformed. ”
The Bank for International Settlements (BIS) defines CBDC as “a digital payment method denominated in national account units (legal tender) and the direct debt of the central bank”, but the digital dollar is already widespread and used every day. The difference between the and CBDC is whether it is a central bank debt or not, he said.
In retail CBDCs, the central bank will play many of the roles that commercial banks have played, as the general public will exchange money directly with the central bank’s system rather than with the commercial bank. ..
In the United States, which already has a “very good payment system” and is undergoing payment innovation by the public and private sectors, changing the Fed into a “bank for the general public” will completely change the banking system and fundamentally change the economic system. Mr. Qualls expressed concern that it could lead to an unexpected and serious situation.
Deny the opinion of CBDC supporters
CBDC advocates argue that the spread of foreign government CBDCs and private digital currencies poses a threat to the US dollar.
Qualls argues, first of all, that the US dollar’s position in the global economy will not be threatened by foreign CBDCs. On many foundations such as the strength and size of the U.S. economy, wide-ranging trade relations with countries around the world, large financial markets, long-term stable dollar value, legal rule and strong property rights and monetary policy. He emphasized that the role of the US dollar as a key currency has been established.
Stable coins are beneficial
Qualls argues that “don’t be afraid” when it comes to private digital currencies, especially stable coins. On the contrary, it seems that it should be actively used after resolving various concerns about stable coins. The main concern about stable coins is the underlying assets that support them, but he said they can be resolved by improving the way they are built and managed.
On the other hand, as a merit of stable coins, it is thought that using the US dollar-denominated stable coin network for cross-border payments will enable quick and inexpensive payments and promote the use of dollars. “It could be implemented much faster and with fewer disadvantages than the CBDC,” he said.
Qualls commented that if concerns were resolved, stablecoins should say “yes” and there is no need to force a search for a “no” reason. With the improvements and innovations of existing payment systems, combined with the efficiency of properly constructed stable coins, he said, “Efforts to develop the CBDC may be unnecessary.” ..
A highly stable virtual currency whose value is backed by the legal tender such as the US dollar. There are mainly two types, one is the type that guarantees the value with legal tender and the other is the type that guarantees the value by adjusting the supply amount. Due to its nature, it is easy to use for payment.
▶ ️ Cryptocurrency Glossary
Balance between anti-maneron measures and privacy, security
Other security issues, such as cyberattacks and unauthorized access, and the difficulty of balancing money laundering prevention measures with personal privacy protection, Qualls pointed out as challenges in designing the CBDC.
The introduction of the CBDC requires not only legislative changes but also large-scale infrastructure construction, and it is necessary to keep in mind that the role of the Fed may change significantly.
From these points, Mr. Qualls concludes that the hurdles for the United States to introduce the CBDC are high.
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“Cryptocurrency” means “cryptographic assets”