Fed Officials Express Skepticism About A U.S. Central Bank Digital Currency

• Two Federal Reserve officials on Monday expressed strong skepticism about the need for the central bank to issue a digital currency, saying that many dollar transactions are already virtual and some of the potential benefits of an official digital currency may be accomplished through other means. 
• The remarks, made at two separate events on Monday afternoon, suggest policymakers could face intense discussions as they explore the potential benefits, costs and logistics of creating a central bank digital currency, or CBDC. 
• Fed Vice Chair for Supervision Randal Quarles said any proposals to create a U.S. CBDC must clear a "high bar," and that he needs to be convinced the potential benefits would outweigh the risks. 
• The Fed official said the U.S. dollar is already "highly digitized" and expressed skepticism that a CBDC would help to improve financial inclusion or lower financial costs. Some of those issues may be better addressed with other solutions, such as improving access to low-cost bank accounts, Quarles said. 
• The policymakers' remarks come as the U.S. central bank is ramping up its efforts to explore the potential launch of a digital currency. The conversation about CBDCs is heating up as some other countries, including China, move more aggressively to pilot digital versions of their currencies, a shift some analysts say poses a threat to the U.S. dollar.

(Source: Reuters)