Federal Reserve's Michelle Bowman Highlights Cautious Approach to Financial Innovations
Summary:
In a discussion at Harvard Law School, Federal Reserve Board member, Michelle Bowman, underscored the importance of cautious innovation within the financial spectrum, emphasizing the potential role of banks in impeding unnecessary government intervention. Her speech centered around innovations like the Central Bank Digital Currency (CBDC) and stablecoins, and their potential effects on the banking system. Bowman rejected the notion that CBDCs are superior to other alternatives, and called for increased regulation for financial innovations, citing the low regulatory structure of stablecoins as a concern. She also expounded on the need to view perceived payment system flaws from a wider perspective, considering policy and business preference factors, while endorsing further research into CBDCs.
On October 17, Michelle Bowman, a member of the Federal Reserve Board, gave a speech at Harvard Law School addressing the subject of financial evolution. She has expressed thoughts on the matter on multiple occasions, with her stance appearing to become increasingly cautious. Bowman discussed many aspects, including the central bank digital currency (CBDC), stablecoin, and bridging the gap between pre-existing systems through the use of "unified ledger" and distributed ledger technologies. Mentioning her previously voiced concerns over the necessity of such advancements, she hinted at the potential of banks in curbing excessive governmental influence. "Our U.S. banking model characterized by intermediation can serve as a buffer against undue government intervention in financial dealings. I am of the firm belief that this model should be the fundament for future financial development," she said.
The Republican board member's echoes of a worry growing among political figures, including governors and members of congress, concerning how banks avert overreach. She further stated that an improperly designed CBDC might lead to disintermediation of banks. Aside from that, Bowman identified problems such as inefficient payment systems, encouraging financial inclusion, and giving the public safe access to central bank money. However, she found no convincing case for CBDC superiority over other options. Specifically, she saw no advantage of CBDCs over the FedNow service that was launched in July. The Federal Reserve has clarified that it would not issue a U.S. dollar CBDC without a directive from congress.
With regard to this emerging financial architectural landscape, Bowman re-emphasized her previous demand for a regulatory structure based on the premise that the same risks warrant the same regulations. Her primary argument against utilizing stablecoins was their low levels of regulatory oversight.
She also pointed out that some flaws in the payment system exist intentionally. "The limitations associated with payments that are perceived do not necessarily emanate from technological challenges but more so from existing policies, laws, and even customer and business predilections," she stated, citing laws against money laundering and restriction of government overreach as instances. Bowman made a case for further research in the CBDC sphere, breaking ranks with certain politicians in this matter. "The Federal Reserve remains willing to explore a variety of avenues to enhance the payments landscape," she mentioned.
Published At
10/17/2023 6:24:25 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.