Circle: “Central Bank Digital Currencies Won’t Do Any Good”

The management of Circle, the issuer of the USDC stablecoin, believes that the launch of central bank digital currencies will do more harm than good.

Many central banks are exploring the possibility of launching their own digital currency in order to eliminate the restrictions that fiat currencies have when making international payments. The US Federal Reserve System (FRS) is no exception.

Recently, the regulator held public discussions related to the launch of the digital dollar. Circle Guide commented document, stating that the development of central bank digital currencies does not make sense, since many of their advantages are already realized in private stablecoins. The creation of government cryptocurrencies could stifle innovation and pose a risk to financial stability.

“Central bank digital currencies, interest bearing or not, could face quality and security issues that would destabilize the two-tier banking system. It is not clear from the Fed’s discussion paper on the digital dollar how it will avert financial stability risks,” Circle said.

The company’s specialists explained that instead of increasing financial inclusion and reducing costs, the introduction of a digital dollar could backfire. Due to rising inflation, public confidence in government and financial institutions is declining, so people who do not have access to banking services will be less inclined to interact with banks and use Central Bank products.

Recently, Fed Vice Chair Lael Brainard urged the government to speed up the launch of the digital dollar to keep up with other central banks on this issue and strengthen the position of the US national currency.

Source: Bits

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