Monday, Sept 11, 2023

The US is not avoiding CBDCs, it just doesn’t intend to build one

“An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity.” – Martin Luther King, Jr.   ||

Hi everyone. For many around the world, today is a sombre day, as most of us know someone affected in some way by the attacks on New York and Washington DC 22 years ago. Two decades and change may sound like a long stretch, but they are a mere blink in time in the shadow of such a world-changing event. My thoughts are with everyone mourning a loved one today, whatever the cause, timeframe or region. And here’s hoping we will all continue to work towards building a less unequal world.

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IN THIS NEWSLETTER

There are some interesting market moves this morning, most notably the relatively strong performance of BTC amid an overall slump – but in the interests of getting this newsletter out on time, I’m going to leave that discussion until tomorrow. Until then, I leave you with a chart of Bitcoin dominance (BTC market cap as a percentage of total market cap) – check out that climb, even as the BTC price drifts lower.  

(chart via TradingView)

Below, I focus on remarks made by Fed Vice Chair Barr on Friday, on the degree of Fed interest in CBDCs – I believe they are intentionally misleading, and what’s more, understandably so.

WHAT I’M WATCHING

The US is not avoiding CBDCs, it just doesn’t intend to build one

On Friday, Federal Reserve Vice Chairman Michael Barr spoke at a fintech conference hosted by the Philadelphia Federal Reserve. One of the topics of his talk was central bank digital currencies (CBDCs), which he said were definitely a topic of interest, but that the relevant authorities were a long way away from any decision.

Why this matters:

Barr’s comments reveal three things:

1. The US is even further behind on CBDCs than many realize relative to other jurisdictions.

2. This is not an accident: CBDCs are not a priority, even though Barr and other Fed officials have to keep up the appearance of being in the game.

3. This is an understandable strategy – the Fed knows that retail CBDCs will never get off the ground, so why waste the time, and wholesale CBDC could be handled by US-based global banks.

Diving into these issues in order: