Ex-FDIC Chair: Current Monetary Tools ‘Inadequate’, Fed Should Consider Digital Currency

The former Chair of the U.S. Federal Deposit Insurance Corporation (FDIC) said that she thinks the Federal Reserve (Fed) needs to seriously consider issuing a central bank-issued digital currency (CBDC) in a June 8 op-ed published on Yahoo! Finance.

In her op-ed, the former FDIC Chair Sheila Bair noted that “the past 10 years are proof positive that current monetary tools are woefully inadequate to stimulate broad-based economic growth,” adding:

“The super rich have gotten a lot richer, while the middle class has struggled.”

Bair first crosses out cryptocurrencies like Bitcoin (BTC) as a way to improve current monetary tools, noting that “unfortunately for M. Nakamoto [sic, anonymous creator of BTC], bitcoin has failed miserably as a method of payment.”

Bair then goes on to describe a hypothetical digital currency, FedCoin, that would be issued and backed by the Federal Reserve. Since FedCoin would be printed by the Fed, it would solve the problems of bank runs in times of financial stress, as “by definition, it [the Fed] can always make good on financial obligations.” According to Bair, the FedCoin could eliminate the need for checking accounts, and thus the costs of maintaining them, as well as reduce interchange fees charged by banks and credit cards for small firms…

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