Michelle Bowman, one of the governors at the Federal Reserve Board, recently spoke at Georgetown University about the possibility of a central bank digital currency (CBDC) in the United States. While acknowledging the potential benefits of CBDC, Bowman expressed her doubts about its necessity for improving the payment system and promoting financial inclusion. According to her, the CBDC would have to outperform the newly launched FedNow system to be a viable alternative and could potentially pose technological barriers for unbanked populations. She also raised concerns about the programmability of CBDC and the risk of its politicization.
Bowman recognized the potential for wholesale CBDC for large transactions and international payments processing, but she saw little justification for direct access CBDC for retail use beyond interbank and wholesale transactions. She emphasized that the adoption of CBDC should be based on a thorough analysis of its costs and benefits, taking into account its impact on monetary policy, financial stability, and privacy. Overall, Bowman’s speech highlighted the need for a cautious and well-considered approach towards the implementation of CBDC in the US.
