As the US warms up to the idea of a CBDC, banks, and fintech firms are not thrilled about being potentially left out.
Wall Street firms are not thrilled about the US’ rumored upcoming CBDC, a Bloomberg report has revealed. Financial institutions and fintech firms are concerned regarding the implications a central bank-issued token could have on their bottom line.
For instance, Mastercard and Visa currently act as intermediaries between merchants and consumers. With a CBDC system, the role of intermediaries would be severely diminished or even eliminated. On the other hand, banks could be edged out of their roles as financial services providers if the Federal Reserve steps in.
Digital Dollar Prototypes Currently in Development
Additionally, according to the Boston Fed’s Senior VP of Payments, James Cunha, research is currently underway to explore the viability of a digital dollar. This study’s results, conducted in conjunction with MIT, will be revealed as early as July this year.
Still, it’s unlikely that any of these prototypes would be ready for mass deployment shortly. Cunha further admitted that a policy debate between the Fed, Congress, and Treasury could result in years of delay.
Furthermore, it appears that the digital dollar may have another naysayer to contend with: the American Bankers Association. According to many at the ABA, the digital dollar could set back the US’ payment system by several years instead of catapulting it ahead. The organization is currently lobbying against the technology and cautioning the public against a Federal Reserve “deposit monopoly.”
Rumors involving a Federal Reserve-backed cryptocurrency have been around for several years now. In that time, several other countries have already unveiled plans for their own digital currency. Still, sentiment surrounding cryptocurrency seems positive in the US — especially with tech giants such as Tesla buying in.