Comment by karaterobot
3 years ago
> “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.”
What people are accusing them of is taking steps toward creating a digital dollar. This is their response, which is pretty mealy-mouthed if it's meant to address those accusations. A better way to express a denial would be "the Federal Reserve has no intention of creating a digital dollar and is not planning for nor working on that project," if indeed that is true.
Because if they DO create one in the near future, then this product SHOULD be designed as a step toward that. If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent.
This seems like a very opinionated take.
The CBDC is still planned. But way far in the future (couple years, at least). And why wouldn't it solve settlement itself?
FedNow is shipping today. If it is not the future solution, that is fine. It gives us better performance now.
I actually don't have a strong opinion about the digital dollar. I learned about it as a concrete idea in this very article. My opinion is: sounds reasonable, probably pretty complicated to pull off. I am opinionated when it comes to bad, weasely non-answers to questions though, if that's what you mean.
If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent.
The characterization of the Federal Reserve as incompetent is the strong opinion I observed. I personally don't agree with the logic you communicated. I think a completely separate CBDC project that is separate from FedNow is perfectly appropriate.
IMO, many policy makers view FedNow as a better ACH.
Whereas, CBDC is a much more controversial project for some policymakers.
Separating the two projects offers some risk mitigation and ensures we will at least have something usable (1) in the short to medium term and (2) even if CBDC is mired in political non-consensus.
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> "the Federal Reserve has no intention of creating a digital dollar and is not planning for nor working on that project,"
If if that were true at this instant, they could change it at whim.
What is really needed is a constitutional protection of privacy.
Consider "We have every intent of creating a digital dollar and are actively planning and working on that project BUT FedNow has NOTHING to do with that project".
They're definitely both.