What is the biggest resistance to the U.S. government’s implementation of digital dollars? The answer is Wall Street!
Imagine that in the future, American people only need to use their mobile phones to log in to their digital dollar accounts, and they can instantly log in to their digital dollar accounts anywhere. With cash, there are no middlemen, no fees, and no waiting for deposits or payments to clear. This vision encapsulates the appeal of a digital dollar, but is clearly becoming a thorn in the side of Wall Street bankers.
Wall Street lenders are currently calling on the U.S. government to delay the launch of the digital dollar, insisting that the virtual currency backed by the Federal Reserve could drain hundreds of billions of dollars from the banking system.
The American Bankers Association and the Bank Policy Institute, industry groups representing large U.S. banks, said central bank digital currencies would become a direct competitor to private bank deposits and reduce access to businesses and households. Possibility of credit. The industry groups were responding to a discussion paper released by the Federal Reserve in January outlining the potential benefits and risks of launching a new central bank digital currency.
The American Bankers Association stated in a letter to the Federal Reserve on May 20: “We have assessed the possible impacts of issuing central bank digital currencies, and it is clear that the claimed benefits of central bank digital currencies are uncertain. , is unlikely to be realized, and the costs are real and acute. Based on this analysis, we believe that the current reasons for the United States to implement central bank digital currencies are not sufficient.”
Recently, the central bank backed by the Federal Reserve. Digital currencies have become a hot topic in Washington, as the cryptocurrency market has grown to more than $1 trillion and recent stablecoin scandals have raised concerns among regulators and lawmakers.
In March this year, the White House stated in an executive order on cryptocurrency policy that it was giving the “most urgent” priority to the research and possible development of a U.S. digital dollar.
While supporters say a Fed-backed digital currency would help ensure the U.S. dollar’s ??dominance as countries including China launch their own official digital currencies, some Wall Street groups I think this move may be counterproductive.
For example, the Bank Policy Institute stated that the digital dollar will dry up a key source of funding for banks. In a separate letter on May 20, the industry group stated that “by attracting deposits from banks, especially during times of economic stress, central bank digital currencies could undermine the U.S. commercial banking system and severely limit the availability of credit in the economy. . ”
The industry groups also said that even if banks and other financial institutions act as intermediaries, any funds deposited by their customers into central bank digital currency accounts will no longer be used for loans and other economic investments. That's because, unlike standard commercial deposits, these funds remain a direct liability of the Fed.
Additionally, the groups noted, setting a cap on the size of central bank digital currency accounts to limit their impact is unlikely to be helpful.
The American Bankers Association predicts that even setting an account limit of $2,500 will still result in a loss of $446 billion in deposits from the traditional banking industry. The organization also noted that a $10,000 account cap would cause more than $1 trillion in deposits to leave the system.
U.S. Treasury Secretary Yellen said in a speech last month that if the United States chooses to create a digital dollar, it may take years to design and develop such a digital dollar. She also pointed out that the U.S. government will fully consider the impact of central bank digital currency on monetary policy, national security and international trade, as well as its usefulness to consumers. Whether Congress requires authorization to create a digital dollar is also an element of the executive order.