CBDC Weekly: Fed’s Bowman Says FedNow Makes Digital Dollar Unnecessary

Fed Governor Michelle Bowman suggested that she believes the FedNow real-time payments system will make a digital dollar unnecessary.

Speaking at the VenCent Fintech Conference in Little Rock, Arkansas, on Aug. 17, Bowman said that “my expectation is that FedNow addresses the issues that some have raised about the need for a CBDC.”

Noting that the Fed’s real-time payments rail “will help transform the way payments are made through new services that allow consumers and businesses to make payments conveniently, in real time, on any day, and with immediate availability of funds for receivers,” Bowman added that the Fed’s assessment of those benefits hasn’t been affected by the debate over how a central bank digital currency would “fit into the future U.S. money and payments landscape.”

See also: PYMNTS Cryptocurrency Glossary: Central Bank Digital Currency

This includes enabling financial institutions of all sizes to offer “safe and efficient instant payment services,” offering a “flexible, neutral platform” for many types of instant payment services and allowing depository institutions and service providers to introduce new customer services.

This would, she said, ultimately enhance competition in the payment services market.

Bowman also took a potshot at the notion that banks are eager to offer crypto-asset services, saying that when it comes to talking of banks’ interest in offering crypto services, the “chatter seems to originate more from those outside the banking industry.”

Colombia’s CBDC Interest Perks Up

Colombia has jumped into the CBDC pond, with Luis Carlos Reyes, director of the Colombian Tax and Customs Office, telling a local paper on Aug. 15 that cracking down on “under the table” cash transactions is a big part of the decision.

While saying that a CBDC would allow real-time transactions and make these instant online “transactions easier for the consumer,” Reyes added that an important goal of a digital peso is ensuring that payments “are recorded in an electronic medium” to make it harder for people void paying VAT or income tax on transactions — particularly large ones.

Cash remains a big part of the economy in Colombia and throughout Latin America, PayU Global Payments CEO Mario Shiliashki told PYMNTS’ Karen Webster in April. Calling it a market opportunity worth several hundred billion dollars for FinTechs and online platforms, he said that “Colombia and Latin America still have a way to go in terms of digital adoption — and in digital payments adoption in particular.”

Read more: Five Million Colombian SMBs Are Ready to ‘Go Digital’ Amid Exploding Demand for BNPL

UK Consortium Seeks Crypto Coexistence

The Digital Financial Market Infrastructure (DFMI) Consortium has launched in the U.K. to explore and “test new payment rails for the global financial system.

The Digital FMI Consortium is a cross-industry group aimed at evaluating and real-world testing “a future digital currency ecosystem that includes the coexistence of existing forms of money, regulated cryptoassets and stablecoins, and CBDCs in the U.K., according to its website.

See also: UK Cross-Industry Consortium to Focus on Future of Digital Currencies

The pilot will “test high-potential use-cases and provide empirical inputs to policymakers and regulators on future design considerations for CBDC development and stablecoin regulation,” it said on Aug. 17.

“Commerce is constantly changing and innovating,” said Alison Conway, head of strategic development at Consortium member Trust Payments. “Against this backdrop, digital currencies and CBDCs in particular offer a unique opportunity to design a playbook that drives interoperability while offering tangible benefits to both merchants and consumers.”


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