Now Is Not the Time for Central Bank Digital Currencies
— July 28, 2021
By Kim Schoenholtz and Stephen Cecchetti
Our arguments are twofold. First, we do not need CBDC to promote faster payments, broaden financial access, or limit private digital currencies. Second, universal CBDC raises critical problems that threaten financial stability and privacy, and unnecessarily boost the role of the state in credit allocation.
Let’s start with payments. As it stands, the public and private sectors are already moving to provide cheaper, faster, more reliable, and more accessible systems that operate both within and across borders. For example, the euro area has the TIPS system, with a processing time of 10 seconds at a cost of €0.002 per transaction. Meanwhile, the UK has Faster Payments, Canada is testing Real-Time Rail, and the Federal Reserve is set to launch its own instant payments service, FedNow, in 2023. None of these require CBDC.
Read the full Financial Times article.
Kim Schoenholtz is a Professor of Management Practice and the Director of the Center for Global Economy and Business.