Federal Reserve (FED) board member Christopher Waller discussed the future development of digital currency, stablecoins, and central bank digital currency (CBDC) at a Atlantic Council seminar on February 9th. Waller emphasized that the payment system in the United States is already very mature and there is currently no need for CBDC. However, we may see more applications of stablecoins and digital assets from commercial banks in the future, with the key factor being whether regulation can keep up.
Regarding the necessity of CBDC, Waller stated that he has not seen a clear demand for it yet. Currently, 130 countries worldwide are studying the development and application of CBDC, with nearly 60 countries already in the pilot phase, including China, the European Union, and the United Kingdom. However, Waller is skeptical and believes that the US payment system is already quite stable and there is no clear need for CBDC. He also questioned, “What problems can CBDC actually solve? Currently, no one has provided a convincing answer.” He believes that the Fed has always been responsible for back-end settlement, allowing banks to handle payment transactions with consumers. The concept of CBDC, on the other hand, requires central banks to directly engage with consumers, which may contradict the long-standing financial operating model in the United States.
Furthermore, Waller criticized the way some central banks are implementing CBDC. He stated, “It reminds me of TV shopping ads, constantly promoting what this thing can do, but without really explaining why it is needed.”
While CBDC continues to develop globally, it does not affect the status of the US dollar
Currently, the European Union, the United Kingdom, and Japan are all promoting their own CBDC and are expected to officially launch digital euro, digital pound, and digital yen by 2030. However, Waller remains calm about whether this will affect the global status of the US dollar. He emphasized, “The core competitiveness of the US dollar does not lie in technology, but in being the world’s largest economy, having a deep capital market, and a stable legal environment.” Even if other countries introduce CBDC, it will not change the fact that international trade and the financial system are still primarily based on the US dollar.
China promotes e-CNY to enhance international payment status, but the US is not worried
China has been actively promoting the digital yuan (e-CNY) and even strengthening its position in the international payment system through the mBridge project. Regarding whether this will weaken the international status of the US dollar, Waller believes that the impact will be limited. He stated, “If some countries only want to do business with the Asian market and do not care about transactions with the United States or Europe, then they can choose to use the digital yuan (e-CNY). But if they want to connect with the global economy, they will ultimately have to return to the US dollar system.” He further pointed out that the key to the US dollar system is not just the currency itself, but the fact that the United States has the strongest financial infrastructure in the world, including the depth of its capital markets, the transparency of its legal system, and a strong global financial network. These advantages allow the US dollar to remain strong and cannot be replaced solely by digital technology.
Stablecoins may become a major payment option, but cash still holds significant value
Regarding the future of payment ecosystems, Waller believes that traditional commercial bank deposits will still be mainstream, but stablecoins may bring more innovation. For example, consumers may choose to use a bank account for transfers and payments, or switch to a stablecoin wallet, similar to the current options of credit cards and mobile payments. However, Waller also emphasized that while the demand for cash is decreasing, it still has a large market. He gave an example, “I haven’t used cash in the United States for over a year and a half, but the global demand for US dollar banknotes is still growing at a rate of 6-7% per year.” He added that even as digital payments become more popular, cash still plays an important role as a “store of value” and may not completely disappear in the next few decades.
The US dollar remains the preferred currency for global trade, the key lies in attractiveness
Regarding discussions on “de-dollarization,” Waller believes this will not become a reality. He pointed out, “We don’t force anyone to use the US dollar, it is their own choice.” He gave an example of a Japanese company and a German company doing business together, stating that they usually choose to use the US dollar as the settlement currency because it provides the deepest liquidity and the most reliable payment system. However, Waller also emphasized that the United States cannot be complacent and must constantly upgrade its financial infrastructure to ensure that the payment system is fast, secure, and stable in order to maintain its attractiveness to other countries.
Digital currency development will still be dominated by the United States
In summary, Waller conveyed several key messages. He stated that the United States is not in a hurry to launch CBDC because the existing financial system is already very stable. The future key factors lie in “regulation” and “technological advancements,” rather than simply following the trend of digital currencies. Regarding the future development of payments, he believes that:
Stablecoins may become a new payment tool, but regulation is needed.
There is no urgent need for CBDC in the United States, as the financial system is already quite stable.
Digital currencies from countries like China will not threaten the global reserve status of the US dollar.
The strength of the US dollar comes from global market trust, not just technological advancements.
(Restricting CBDC! Trump’s new executive order promotes blockchain and establishes stablecoin legislation to consolidate the sovereignty of the US dollar)
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