ABA "CBDC Benefits Uncertain, Costs Real"
Governor of Banque de France "Possibility of CBDC Used Daily Within 3 Years"
Wall Street sign, AP = Yonhap News
[Asia Economy Reporter Kim Jung-wan] As central bank digital currencies (CBDCs) are expected to be introduced soon in various countries, Wall Street in the United States has raised objections, warning that the introduction of CBDCs could significantly weaken the functions of the banking sector.
According to Bloomberg on the 23rd (local time), the American Bankers Association (ABA) and the Bank Policy Institute (BPI), leading organizations representing the U.S. banking industry, recently highlighted potential side effects if the U.S. issues a digital dollar and argued that its introduction should be postponed.
ABA and BPI stated that CBDCs would directly compete with traditional bank deposits, and if deposits decrease, it would become more difficult for households and businesses to obtain loans.
While proponents of CBDCs argue that introducing a digital dollar amid global CBDC initiatives would reinforce the dominance of the dollar, the financial sector voices criticism regarding possible adverse effects.
ABA sent a letter to the U.S. Federal Reserve (Fed) stating, "The benefits attributed to CBDCs are uncertain and may not materialize, whereas the associated costs are real and severe."
BPI predicted that the introduction of a digital dollar would dry up major funding sources for traditional banks. In particular, it forecasted that "during economically challenging times, CBDCs would siphon off bank deposits, weakening the U.S. commercial banking system and severely restricting loan availability."
Meanwhile, over 100 countries worldwide have already begun researching or piloting CBDCs under central bank leadership, ahead of the U.S.
Recently, the sharp price decline of stablecoins such as the Korean virtual currencies Luna and TerraUSD (UST), which emphasized stability, has caused significant losses for investors, drawing attention to cryptocurrency regulations and the necessity of CBDCs.
Amid this, cryptocurrency-focused media The Block reported that Fran?ois Villeroy de Galhau, Governor of the Bank of France, projected at the World Economic Forum (WEF) annual meeting at the Davos Forum in Switzerland that widely used CBDCs would emerge within 3 to 5 years.
When asked whether CBDCs used routinely would be introduced within 5 years, he replied, "We are conducting several experiments not far from that level; it is not yet widespread but possible." He added, "Let's say within 3 years," expecting faster progress in the wholesale sector, which is less sensitive than retail. However, he did not specify which country's CBDC he was referring to.
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), agreed, stating, "Within 5 years, CBDCs will be quite prevalent worldwide."
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