Later today, there will be a U.S. Senate hearing on central bank digital currencies (CBDC). The American Bankers Association (ABA) has submitted written testimony in advance of the hearing in which it questions the need for a digital dollar.
It claims current policy discussions are like a movie highlight reel that emphasizes the benefits while downplaying the risks. Instead, it points to the widely recognized side effect that a CBDC could draw away bank deposits, making lending more expensive if banks have to lean more on wholesale lending.
The ABA asserts that the United States already has robust payment systems and the country shouldn’t adopt a CBDC because others are doing so.
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