Wall Street Bank Lobby Lines Up Against a US Digital Dollar
- ABA, BPI say CBDC would likely drain deposits from bank system
- US government weighing whether to launch own digital currency
Wall Street lenders are calling on the US government to hold off on launching a digital dollar, arguing that a virtual currency backed by the Federal Reserve risks draining hundreds of billions of dollars out of the banking system.
An American central bank digital currency, or CBDC as it’s known, would act as a direct competitor to private bank deposits and make credit less available to businesses and households, according to the American Bankers Association and the Bank Policy Institute. The trade groups were responding to a Fed discussion paper released in January that laid out the potential benefits and risks of launching a new virtual tender.