According to Fed governor Christopher J. Waller, the United States and the world benefit from the importance of the fiat US dollar. A stablecoin such as the US Central Bank Digital Currency won’t change this opinion. During his speech on October 14, 2022, Waller admitted that the US CBDC couldn’t improve the quality of the fiat US dollar. It is one of the most valued currencies by companies worldwide.
He made his opinions known at a symposium held at Harvard University on Friday while speaking about the current state of the nation’s security system. Waller had a more favorable consideration of a dollar-backed stablecoin, adding that the duty of the US dollar worldwide is for national security dovetail, CBDC, and economics. The importance of the US dollar is economically beneficial to the country and some other countries where the US dollar is their primary currency for economic transactions.
Waller’s Thoughts On The Impact Of US CBDC
Waller added that the strength of the US dollar is not based on technological factors. Hence, introducing a national digital currency will not affect its superiority. He doubted that “the supposed shift in the payments landscape due to the growing popularity of digital assets, particularly CBDCs,” is a warning sign to all currencies globally, not just the US dollar.
In addition, he said that a US CBDC isn’t likely to cause massive changes to the liquidity or strength of the nation’s financial markets. “It is unlikely to affect the receptivity of the US economy, change the trust in our institutions, or negatively impact our commitment to the rule of law.”
However, his statement doesn’t align with his opinion about stablecoins. He denied rumors that stablecoins could negatively impact the effectiveness of the economic policy, saying, “I don’t see that to be the case.” He also noted that “almost all important stablecoins” are domiciled in dollars. Waller concluded that “stablecoins should be subjected to US economic rules similar to holding the US dollar.”
This decision could affect the US’s economic influence over other countries. He explained, “The economic factors encouraging the US dollar’s use as a reserve currency are based on proper research and documentation.” However, he clarified that his arguments were purely his personal opinions, not those of the US Fed.
“I am highly skeptical that a CBDC can lower frictions in the traditional payment system,” and “I don’t think that a large issuance of a stablecoin currency will have a huge impact on the supremacy of the US dollar.” Waller also admitted that he is willing to argue his position with others in the space. His views about the digital dollar and stablecoins remain unchanged.
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