Atlantic Council: Miscalculating Dollar's Innovation Potential Federal Reserve Falling Behind in CBDC RaceThe Atlantic Council warns that the US Federal Reserve is trailing its global counterparts in the race to develop a
central bank digital currency (CBDC). While the Bank of China boasts a team of over 300
dedicated to their CBDC, the Fed has only allocated a modest group of twenty to explore a digital dollar.
Fednow Delayed, Adoption LimitedNot only is the Fed slow on CBDCs, but its interbank settlement system, Fednow, has also faced delays compared to similar systems in Europe. Early adoption of Fednow has been lackluster, raising
concerns about the Fed's ability to keep pace with innovation.
Dollar Doesn't Need Innovation? Think Again!The authors point out that some within the Fed and Capitol Hill mistakenly believe that the dollar is immune to innovation. They caution against complacency, emphasizing that disrupting the global economic backbone requires careful consideration but not outright resistance to change.
Trump Joins Opposition, But Time Waits for No ElectionEven former President Trump has voiced his opposition to a CBDC, vowing to block it if reelected. However, the Atlantic Council urges against waiting for post-election clarity, reminding us that in technology terms, a year can be an eternity.
Decentralized Challenges and Community Bank ConcernsFranklin Knoll from the Federal Reserve Bank of Kansas City argues that comparing the Fed with centralized banks overlooks its decentralized nature and unique challenges. He also highlights the resistance from community banks as a factor shaping politicians' views on
CBDCs.In this rapidly evolving digital landscape, it's clear that the belief that the dollar doesn't need innovation is a miscalculation that could have far-reaching consequences for the global financial system.
