The U.S. Treasury Secretary Janet Yellen says that she has
not made up her mind about whether the Fed should issue a central bank
digital currency (CBDC). “There are some benefits” to a digital dollar,
Yellen said, but noted that “there are also meaningful costs.”
Janet Yellen Has Not Decided Whether the Fed Should Develop a Digital Dollar
Treasury Secretary Janet Yellen said Thursday during an interview at
the Reuters Next conference that she has not formed an opinion about
whether the Federal Reserve should create a digital dollar.
She explained that the decision would require broad consensus among
Congress, the central bank, and the White House. The treasury secretary
believes that more study is needed on the advantages and disadvantages
of having a central bank digital currency (CBDC) in the U.S., including
its effects on the banking system. Yellen opined:
I see both pros and cons to doing it. And my own mind is not made up about this.
According to the Atlantic Council’s Geoeconomics Center, 87 countries
(representing over 90% of global GDP) are currently exploring a CBDC.
Federal Reserve Governor Lael Brainard has called on the Fed to
urgently develop a digital dollar. She said in July that she cannot
understand why the U.S. is not actively developing a central bank
digital currency when China and other countries are. Brainard is
President Joe Biden’s nominee to serve as vice chair of the Federal
Reserve.
Yellen, who served as the 15th chair of the Federal Reserve from 2014
to 2018, said the U.S. central bank is expected to release a report
detailing its work on a CBDC soon. She added that the Fed understands
that consensus is necessary to proceed.
Nonetheless, the treasury secretary said the issue of whether the Fed
should develop a central bank digital currency has not been discussed
in a “serious way” at the White House, elaborating:
This is a decision that’s important and needs to command
consensus. There are some benefits, but there are also meaningful costs …
It can work to disintermediate the banking system. And, you know, we
need to work through the pros and cons. I don’t have a view yet.
Several Federal Reserve governors do not see
the benefits of the Fed issuing a digital dollar, including Governors
Michelle Bowman, Randal Quarles, and Christopher Waller. “I remain
skeptical that a Federal Reserve CBDC would solve any major problem
confronting the U.S. payment system,” Waller recently said.
In September, Federal Reserve Chairman Jerome Powell shared an update on the progress of the digital dollar study. He insisted that the Fed is not behind other countries on central bank digital currency (CBDC).
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