ICBA expressed opposition to the establishment of a U.S. central bank digital currency. In a comment letter to the Federal Reserve, ICBA said a U.S. CBDC would introduce significant privacy and cybersecurity risks into the nation’s monetary system and disrupt U.S. banking stability.
News Release: “While ICBA supports the Federal Reserve’s efforts to ensure the U.S. payments and monetary system remains modern and competitive, a U.S. CBDC would introduce costs and risks far exceeding any benefits to consumers, small businesses and the broader economy,” ICBA President and CEO Rebeca Romero Rainey said in a national news release.
Comment Letter: In its comment letter responding to the Fed’s CBDC consultation paper, ICBA said:
A U.S. CBDC would obstruct the ability of banks to take deposits and make loans, pose privacy and cybersecurity risks, provide a gateway to direct-to-consumer Fed accounts, and damage the Fed’s ability to conduct monetary policy, among other risks.
A U.S. CBDC would not yield benefits more effectively than alternative methods, which the Fed states is a prerequisite to creating a CBDC.
Alternatives—including deposit accounts and faster payments options—can more effectively achieve the Fed’s policy goals.
As financial intermediaries and the nation’s leading small-business lenders, community banks’ access to deposits and ability to lend funds to support economic growth and development would be dramatically affected by the creation of a competitively advantaged CBDC.
The Fed should not proceed without explicit statutory authorization and oversight from Congress because the authority to issue a CBDC does not exist under current law.
Next: The House Financial Services Committee is scheduled to meet this Thursday for a hearing on the benefits and risks of a U.S. CBDC.
