The American Bankers Association, a major trade association representing banks across the US, is cautioning against a central bank digital currency.
"The purported benefits of a U.S. Central Bank Digital Currency (CBDC) are uncertain and unlikely to be realized, while the costs are real and acute," the ABA wrote to the US Department of Commerce.
The Commerce Department had put out a request for public commentary in May in response to President Biden's March executive order calling on federal agencies to report on digital assets. The Commerce Department's comment window closed on July 5.
"The issuance of a CBDC would fundamentally rewire our banking and financial system by changing the relationship between citizens and the Federal Reserve," the association continued. "There are also significant trade-offs that must be made between different design choices. These trade-offs are likely to undermine many of the key goals of a CBDC and make it essentially impossible for a CBDC to fulfill all the various purposes for which it is currently being discussed."
The ABA is a longstanding voice for the banking industry. It reported over $135 million in revenue in their most recent form 990, from 2019. Its comments come as a US CBDC has increasingly become the subject of political back-and-forth.
A frequent consideration is that a CBDC could disintermediate retail users from the Federal Reserve — which would threaten commercial banks and, critics say, financial privacy among individuals.
Other respondents to the Commerce Department included crypto-focused trade associations like the Blockchain Association, the Chamber for Digital Commerce and the Association for Digital Asset Markets.
Less overtly hostile to CBDC development, the Chamber for Digital Commerce wrote "U.S. CBDC should be designed to be complementary to other forms of digital money that have already been developed."
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.