WASHINGTON—Federal Reserve Governor Michelle Bowman is expressing reservations over the potential to issue a wholesale central bank digital currency (CBDC) on a unified ledger, a concept that has been proposed by the Bank for International Settlements (BIS).
The BIS proposal would see central bank digital currency, tokenized deposits and regulated digital assets settle on the same network, Ledger Insights reported.
“Gov. Bowman’s reservations are not about wholesale CBDC per se, but the risk of allowing ‘central bank money to circulate on a platform that is not owned and operated by the central bank’,” Ledger Insights stated. “The governor acknowledged another route involves central banks maintaining their own ledgers. However, she views the term ‘wholesale CBDC’ as a misnomer because central bank money is already used for wholesale transactions.”
An Earlier Trial
Meanwhile, the New York Fed’s innovation arm participated in a Regulated Liability Network (RLN) trial earlier this year.
“The RLN is a similar concept to the Unified Ledger and arguably inspired it,” the report stated. “We’ve found that some commercial banks embrace the Unified Ledger concept. Others see it as a long-term North Star to move banks towards interoperability, but is too hard to achieve.”
A Key Issue
Bowman noted that a key issue with payments innovation is identifying whether the technology delivers improvement. Or whether the benefits actually flow from the required supporting policy changes, according to Ledger Insights, which added, “Those policies often exist for a reason, Ledger Insights said.
“Which specific payment frictions can benefit from technological innovation itself and which are questions of policy and exist for good reasons?” Bowman asked.
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