Central bank digital currencies have elicited mixed responses around the world, but for one former chair of the US Federal Deposit Insurance Corporation, they might offer a better tool to conduct monetary policy than existing methods. In an opinion piece published on Yahoo Finance, Sheila Bair called on the Federal Reserve to seriously evaluate the relative merits of issuing its own digital currency. Bair noted that current monetary policies have proven unable to stimulate broad-based economic growth and have only made the rich richer while the middle class continues to struggle.
The Fed Must Stay Ahead of the Technology
A CBDC would be as stable as any fiat currency, all the while reducing the risk of financial crises, Bair noted. The transition must, however, be gradual to allow the economy to adapt to the changes, lest it risk severe negative consequences. While the current banking setup works under normal conditions, it wouldn’t hold under extreme stress, as most people would lose confidence in their banks, she explained.
A digital currency issued and backed by the Federal Reserve would be the perfect solution, according to the former chair, who was instrumental in the government’s response to the 2008 financial crisis. With
Categories: Crypto Currency Portal