Federal Reserve Governor Christopher Waller said Thursday he’s not convinced that a central bank digital currency (CBDC) would solve any existing issues that are not being addressed by other initiatives. Instead of a digital dollar, Waller backed private counterparts, specifically stablecoins, during a <a href="https://www.federalreserve.gov/newsevents/speech/waller20210805a.htm" target="_blank" rel="nofollow noopener">speech</a> before the American Enterprise Institute.
<h2>Stablecoins Could Challenge Banks for Payments, CBDC May Cause Problems: Waller</h2>
"I remain skeptical that a Federal Reserve CBDC would solve any major problem confronting the U.S. payment system," Waller remarked on Thursday. His comments come weeks ahead of a research paper where the central bank would look into the use cases of a CBDC.

Implementation of the digital dollar was also linked to higher chances of surveillance by Waller. The Fed governor cited <a href="https://www.cryptoknowmics.com/news/politicians-in-the-us-raise-concerns-over-cbdc-led-surveillance/">China's</a> example to elaborate on his point and stated:

"The introduction of a CBDC in China, for example, likely will allow the Chinese government to more closely monitor the economic activity of its citizens. Should the Federal Reserve create a CBDC for the same reason? I, for one, do not think so."

As for the current problems faced by payments systems, Waller pointed out that a group of commercial banking institutions had recently developed an instant payment service or RTP, and the Federal Reserve is in the process of developing a similar system, dubbed FedNow. He claimed that the facility would transfer payments immediately after they are initiated. Furthermore, he said that efforts to improve cross-border payments were also underway.

Although Waller remained <a href="https://www.cryptoknowmics.com/news/sec-chair-gary-gensler-suggests-stablecoins-are-securities/">cautious</a> on stablecoins, he was sure that they could become attractive payment instruments. He added that if one of the circulating stable currencies develops a sizeable user base, then it could challenge banks for processing payments. Consequently, banks would be forced to reduce their charges for payment services in the face of competition.
<h2>Stablecoins to Act As a Conduit for US Monetary Policy</h2>
Unlike industry watchers who’ve sounded the alarm about private currencies, Waller believes that any asset which surrenders to the U.S. dollar acts as a conduit for the monetary policy of the United States. He borrows this logic from international economics.

“It is well established in international economics that any country that pegs its exchange rate to the U.S. dollar surrenders its domestic monetary policy to the United States and imports U.S. monetary policy,” he noted.

Waller used this reasoning to argue that private stablecoins pegged to the dollar’s value broaden American monetary policy’s reach rather than challenging it.

Fed Governor Waller Backs Stablecoins, is Doubtful of the Need for CBDC

Fed Reserve Governor Christopher Waller supported stablecoins saying he’s not convinced that a CBDC would solve any existing issues.

Divya is a postgraduate from Jawaharlal Nehru University specializing in International Relations and a professional writer with more than 5 years of experience writing for the web. She is an avid reader interested in the global financial system and the effects of decentralization. At Cryptoknowmics, she hopes to deliver clear and understandable content to inform readers about the latest events in the crypto sector.

Fed Governor Waller Backs Stablecoins, is Doubtful of the Need for CBDC

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