The Federal Reserve Discusses Digital Currency and the Future of Payments: Stablecoins to Consolidate the Dominance of the US Dollar, No Need to Force CBDC Implementation
Christopher Waller, a member of the Board of Governors of the Federal Reserve (FED), discussed the future development of digital currencies, stablecoins, and central bank digital currencies (CBDCs) at a seminar hosted by the Atlantic Council on February 9th. Waller emphasized that the payment system in the United States is already very mature and there is currently no need to adopt CBDC. However, we may see more applications of stablecoins and digital assets from commercial banks in the future, and the key lies in whether regulation can keep up.
Regarding the necessity of CBDC, Waller stated that he has not seen a clear demand for it. Currently, 130 countries worldwide are studying the development and application of CBDC, with nearly 60 countries entering the pilot phase, including China, the European Union, and the United Kingdom, which are actively promoting it. However, Waller remains reserved, questioning what problems CBDC can actually solve. He believes that the Federal Reserve has long been responsible for back-end settlements, 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 deviate from the long-standing financial operating model in the United States. Furthermore, he criticized the approach of some central banks in implementing CBDC, likening it to a TV shopping advertisement that promotes something without explaining why it is needed.
While CBDC development continues globally, it will not affect the status of the US dollar. The European Union, United Kingdom, and Japan are currently promoting their own CBDCs, with digital euro, digital pound, and digital yen expected to be officially launched before 2030. However, Waller remains calm about whether this will impact the global reserve currency status of the US dollar. He emphasized that the core competitiveness of the US dollar lies not in technology, but in being the world’s largest economy, having deep capital markets, a stable legal environment, and even if other countries introduce CBDC, it will not change the fact that international trade and financial systems are still dominated by the US dollar.
China’s promotion of e-CNY to enhance its international payment status does not concern the United States. China has been actively promoting digital renminbi (e-CNY) and even strengthening its position in the international payment system through the mBridge project. Waller believes that this will have a limited impact on the US dollar’s international status. He stated that if certain countries only want to do business with the Asian market and do not care about transactions with the United States or Europe, they can choose to use e-CNY. However, 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 lies not only in the currency itself but in the fact that the United States has the strongest financial infrastructure globally, including the depth of capital markets, transparency of the legal system, and a robust global financial network. These advantages allow the US dollar to maintain its strength and cannot be replaced solely by digital technology.
Stablecoins will become one of the main payment options, while cash still holds significant value. Looking at the future of payment ecosystems, Waller believes that traditional commercial bank deposits will still be mainstream, but stablecoins may bring more innovation. For example, in the future, consumers may choose to use bank accounts for transfers and payments or switch to stablecoin wallets, similar to the choices we have now with credit cards and mobile payments. However, Waller also emphasized that while the demand for cash is declining, it still has a significant market. He gave an example, stating that he hasn’t used cash in the United States for over a year and a half, but the global demand for US dollar bills continues to grow at a rate of 6-7% per year. He added that even as digital payments become more prevalent, 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, and the key lies in attractiveness. Regarding discussions on “de-dollarization,” Waller believes that this will not become a reality. He pointed out that the United States does not force anyone to use the US dollar; it is their own choice. He gave an example where a Japanese company and a German company doing business together would still typically choose to settle in US dollars because of the deep liquidity and reliable payment system it offers. However, Waller also emphasized that the United States cannot be complacent and must continuously upgrade its financial infrastructure to ensure fast, secure, and stable payment systems 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 lies in “regulation” and “technological advancements,” rather than simply chasing the trend of digital currencies. Regarding future payment development, he believes:
Stablecoins may become a new payment tool but need regulation.
There is no urgent need for CBDC in the United States, as the financial system itself 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.
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