The American Bankers Association (ABA) does not support digital dollar, which is a payment system based on distributed ledger technology (DLT) and run by the United States Federal Reserve.
In a statement issued for the record in a hearing on the examination of the possible actions the banking industry could consider towards mitigation of the impact of the coronavirus pandemic, the association noted some arguments which oppose a Central Bank Digital Currency (CBDC).
The statement responded to Congress considering the utilization of digital dollars and FedAccounts towards the enhancement of stimulus checks’ delivery to United States citizens.
The association noted that despite the banks’ crucial role in the delivery of much needed stimulus and their support for customers and communities affected by the pandemic, FedAccounts backed by new digital dollars cannot help in achieving the intended goal and would instead bring about unintended impacts capable of undermining the United States economic recovery and threaten the stability of the banking system without contributing meaningfully to economic inclusion.
The ABA strongly supports electronic payments and noted that the technology is already in use today and that revolutionary growth in access to a growing number of options is ongoing.
“Consumers and merchants value choices, from cash to mobile payments, and displacing those choices with a so-called digital dollar would be a costly solution in search of a non-existant problem. For those consumers and merchants left behind, such as those who prefer cash, the costs of this experiment would be high.”
The association strongly agrees with the aim of the proposal – the improvement of the speed and accessibility of mainstream electronic payments options. Instead of reinventing the USD and turning the Federal Reserve from the lender of last resort to the default banker for the majority of Americans, the association invited the committee to join them in enhancing the growth in options available in the electronics payments domain.
According to the ABA, federalizing the banking system will introduce grievous risks to monetary policy, financial stability, credit availability, and financial inclusion. Likewise, it noted that the Federal Reserve is not positioned to be a retail bank, arguing that the proposal for FedAccounts and a digital dollar would sabotage retail bankers’ efforts and lead to unintended effects as well as financial instability.
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