Multiple banking and finance industry bodies have responded to the U.S. Federal Reserve consultation on a potential central bank digital currency (CBDC) or digital dollar. Looking at three responses from the American Bankers Association (ABA), Bank Policy Institute (BPI), and the Institute of International Finance (IIF), none of them were particularly supportive, with the IIF being the least resistant.
All three had common themes, which included concerns that a CBDC will reduce deposits within the banking system and unclear compensation for intermediaries with a two-tier retail CBDC.
The IIF asked to see a quantitive and qualitative assessment of the impact of a variety of CBDC designs. The most discussed format for issuing a CBDC is for the central bank to use intermediaries such as banks that would deal with customers. A particular concern for the IIF is that a CBDC might impose costly burdens on an intermediary, such as for anti-money laundering, with minimal or no payoff, given that CBDCs are intended to have low consumer costs, like cash.
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