Comments from Quarles
- It seems unlikely that the US dollar’s status would be threatened by a foreign CBDC
- Any proposal to create US central bank digital currency must clear a high bar
- It’s conceivable that a Fed CDBC might deter private sector innovation
- The US dollar is already highly digitized
- It’s appropriate to explore the benefits, costs and particularities of CDBC
The headline is an interesting one. If there’s a currency that adopts digital protocols quickly it could add to demand for it. That said, no one likes to take currency risk and it’s not particularly cumbersome to US dollars for most transactions.