Creation of U.S. CBDC could worsen financial services ecosystem


There are many open questions surrounding central bank digital currencies, CUNA wrote to the House Financial Services Committee Thursday for its hearing on CBDCs. A Federal Reserve discussion paper defines CBDCs as “a digital liability of a central bank that is widely available to the general public,” analogous to a digital form of paper money.

“We believe that a focused enunciation of the issues to be solved through a CBDC, and a more refined outline of the proposed design, is necessary before a substantive dialogue among stakeholders is possible,” the letter reads. This conversation will be iterative and an extended process; however, we are concerned that under several scenarios, the creation of a CBDC could significantly worsen the provision of financial services.

The additive value of a CBDC must be carefully weighed against these risks, and the process should not proceed without a clear purpose that mitigates these threats,” it adds. “The creation of a CBDC deserves serious and exacting consideration and implementation should not proceed without Congressional authorization.”

Specific concerns include the impact on the financial system, costs to implement a CBDC, and uncertainty about the goals of developing a CDBC.

CUNA also sent a joint letter with other financial services trade organizations noting the lack of a “compelling case” for a CBDC in the U.S.

“Proponents of CBDC cite a number of laudable goals in support of a CBDC, such as increasing financial inclusion and promoting the U.S. dollar’s international role as a reserve currency and a medium of exchange for international trade,” the letter reads. “The joint trades support these important goals; however, we do not believe that a CBDC is well-positioned to accomplish them.”

Thursday’s letters to the committee follow CUNA’s letter to the Federal Reserve sent last week in response to a discussion paper on CBDCs.



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