Tuesday Topic: Central Bank Digital Currencies

The conundrum of having a global digital currency lies with getting everyone on board regarding regulation and oversight.  Instead, I see individual countries digitizing their currency.  Unlike banks, current digital currency platforms do not have to adhere to regulations (e.g. BSA, AML, etc.).  When digital currencies remain unregulated, laws in place to curb terrorist financing, illegal operations, and tax evasion are defeated.  Digital currencies need to be regulated and backed in a legitimate, viable, and sustainable manner to provide stability and minimizing volatility.  Such volatility is fueling valuations of digital currencies with speculative positions coupled with a financial system flooded with liquidity earning near zero interest.  There is a demand and need for digital currencies.  The approach to regulation and determination of entities backing digital currencies will be key to a sustainable future for digital currencies.

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Matt Johnson
CFO
Premier Bank
Omaha, NE
Posts reflect my personal opinion and do not represent any organization in which I am affiliated.
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Original Message:
Sent: 06-07-2021 09:47
From: Barb Rehm
Subject: Tuesday Topic: Central Bank Digital Currencies

What started as curious conversation a few years ago has turned into a serious debate. The topic: digital currencies issued by central banks. 

Fed officials are under pressure to create a digital dollar, for fear China will beat us to the punch with a digital yuan that might threaten the dollar's global dominance. Fed Chair Jay Powell thinks Congress may need to pass legislation before the central bank can act and, on Wednesday, the Senate Banking Committee is holding a hearing "Building A Stronger Financial System: Opportunities of a Central Bank Digital Currency." The Fed has been quietly and deliberatively studying the idea and Powell recently announced the Fed will issue a research report on CBDCs this summer. American Banker weighed in this week with a look at CBDC progress around the globe, "A World Tour of Digital Currency Projects." I'm not sure why or how digital beats physical currencies.

What do you think? Does the world need central bank digital currencies? Why?

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Barb Rehm
Senior Managing Director
IntraFi Network
Arlington VA
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