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U.S. banks are warning the Federal Reserve Board about the dangers of launching a digital dollar. They believe that the Federal Reserve, launching its own digital dollar, could destroy the foundations of banking as it exists. This is indicated by Letters, which industry lobbyists have sent to the US Federal Reserve.
Earlier, the Fed invited them to comment on the report, which explores the future of a potential central bank digital currency (CBDC) issued in the United States. Banks believe that the state digital dollar can have a serious impact on the financial sector, as well as on stablecoins issued by cryptocurrency firms.
“Current research overwhelmingly undermines the purported benefits of CBDCs and instead indicates that CBDC will seriously disrupt the financial system, causing significant harm to consumers and businesses,” said Greg Baer, who directs the Banking Policy Institute, one of Wall Street’s lobbying units in Washington.
Another washington-based banking group, the American Bankers Association, predicted in a letter that the digital dollar would mean that deposits, which make up 71% of bank financing, risk going to the Federal Reserve.
The ABA letter said it would dramatically increase the cost of financing in the banking sector to “unsustainable” levels. The Fed Board is now weighing all the risks and opportunities. At the same time, Michael Barr, president-elect Joe Biden as the fed’s next vice chairman, reiterated that all risks would be weighed before the CBDC issue was finally resolved.
While the digital U.S. dollar has been frequently mentioned in congressional hearings and debates over legislation, no bill has yet found support to prompt the Fed to enact it.
At the moment discussion of CBDC Includes questions about its potential impact on stablecoins, and Fed Chairman Jerome Powell has pointed out that stablecoins can coexist with the digital dollar without deteriorating the financial sector.
It has previously been argued that one of the most frequently cited reasons in support of CBDCs is that they will increase financial inclusion, however, no evidence has been provided that the digital dollar will actually bring practical benefits to the country’s financial system.
Author: Vadim Gruzdev, Analyst at Freedman Club Crypto News
#banks #digital #dollar #issued
