Federal Reserve President Christopher Waller said Friday there is “nothing revolutionary” about central bank digital currencies, or CBDCs, compared to traditional banking systems. .
“It’s unclear what we’re going to get with a CBDC,” Waller said at an event he hosted. The Brookings Institution Falk Auditorium shares virtually all the same features as a traditional bank account.
A CBDC is a digital version of a currency linked to the legal currency of the issuing country. Therefore, central banks (such as the Federal Reserve), rather than commercial banks, will issue CBDCs. Some argue that CBDCs can provide the general public with a secure and fast means of digital payments and remittances.
Waller noted that the introduction of a retail CBDC, a government-backed digital currency used by consumers and businesses, would require changes to U.S. law. That’s because only banks (and the U.S. government) can hold master accounts at the Fed, which sits on the front end of the financial system.
Asked about the FedNow instant payments system that the Fed introduced in late July, Waller said there is only one key difference in how the U.S. banking system is modernized: timing.
He added that FedNow reduces the “time it takes to clear and settle trades,” and “other than that, there’s nothing new.”