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Minneapolis Fed president Kashkari weighs in on CBDC: ‘Handwaving word salad’

May 15, 2023No Comments


Federal Reserve Bank of Minneapolis President Neel Kashkari took part in a fireside chat at the Minnesota Transportation Conference & Expo on May 15. While speak Mainly on topics not related to cryptocurrency and blockchain, he made a strong assessment of central bank digital currency (CBDC) during the question and answer session after his presentation.

“We are looking into it,” Kashkari said of CBDC, adding that the Fed believes an act of Congress would be needed to allow it to issue its own digital currency.

“Whether it is Bitcoin or digital currency, no one has been able to articulate what problem it is actually solving. […] I can send $5 to anyone in this room right now using Venmo. […] So what can a central bank digital currency do that Venmo can't?

"It's just a bunch of hand-waving word salad about maybe it's better […] But there is no evidence that it is better," he continued.

Kashkari rhetorically asked why China might have been motivated to introduce its CBDC, and replied: "In theory, a government could monitor every one of your transactions with a central bank digital currency." However:

"We wouldn't be in favor of that at the Federal Reserve."

Kashkari had more drawbacks to suggest. The government could impose negative interest on an account. “You can't do that on Venmo and we don't want to do that at the Federal Reserve,” he said. A CBDC would also facilitate direct account enforcement, he added.

Related: RFK Jr. Elaborates His Position On CBDC, Crypto: "It's Not Just Criminals Who Want Privacy"

“I share a lot of your privacy concerns,” Kashkari said, addressing the person who asked the question. "We have no interest in violating the privacy of the American people at the Federal Reserve."

"I've developed deep skepticism at this point," Kashkari said, "but I'm going to keep an open mind and see what the studies come up with."

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