Christopher Waller, U.S. Federal Reserve Governor, has downplayed the effectiveness of cryptocurrency and the need for a central bank digital currency (CBDC) in the United States.
While speaking at a panel on CBDCs, the governor describes crypto as not payment instruments but just “electronic gold” as they can function as wealth-carrying storage.
He continued that crypto can be compared to art and baseball cards, which people buy with the hope of getting returns on their investments.
The Governor, still speaking on the industry, revealed that he thinks blockchain technology is overhyped.
According to him, blockchain does not provide the most efficient way of doing things. In his words,
We know distributed ledger blockchain is one way of doing transactions and record-keeping, but it’s not efficient.
It should be noted that the Federal Reserve Governor is alone in his thoughts, as blockchain technology has been heralded as the next big thing within the tech space.
Governor Waller also communicated his uncertainty concerning CBDCs. He stated that there was no major need for it since it is to make payments faster, and different financial platforms are doing that already.
He further questions the need for the Federal Government to involve itself in processing payments and to offer payment services when the banks can do that. Furthermore, he added that CBDC research papers as infomercials, considering the noise and hype that comes with it.
Will the U.S. Adopt a CBDC?
Though the United States is still considerably dragging its feet about adopting a CBDC project. Various central banks across the world have developed a national digital currency, with China leading the pack with its Digital Yuan project.
Some analysts have posited that the failure of the U.S. government to launch a CBDC project could lead to the country playing second fiddle to countries like Japan, China, and others who have made substantial progress.
But Waller holds a different position to these thoughts. According to the Federal Reserve Governor, retail access to the Digital Dollar from citizens of other countries would put their national currency in jeopardy, as “any currency backed by the dollar helps to amplify the U.S. monetary policy.”
Just recently, the Chairman of the Federal Reserve, Jerome Powell, stated that the agency remains unsure of if it wants to create a CBDC.
Powell, however, admits that digital innovation is here and that there’s a need to formulate new laws, principles, and guidelines to address them.
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