Macro Musings with David Beckworth George Selgin on the Future of CBDC, Fed Accounts, and Stablecoins
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Jan 24, 2022 
George Selgin, a senior fellow at the Cato Institute with expertise in monetary economics, discusses central bank digital currencies (CBDCs) and stablecoins. He highlights the potential risks of CBDCs creating financial instability and the challenges of integrating retail digital accounts. Selgin also explores the transformative role of Federal Reserve accounts in banking, advocating for a balanced approach to foster innovation while ensuring systemic stability. He delves into wholesale CBDCs, their interaction with private stablecoins, and the evolving regulatory landscape.
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Fed Should Support Wholesale CBDC
- The Fed should expand its wholesale payment services to private digital currency issuers instead of offering retail digital currency directly.
- This approach fosters innovation and avoids undue disruption in the retail banking sector.
Fed-Private Competition Harms Innovation
- Fed competing with private firms risks unfair competition due to regulation and cross-subsidies.
- This undermines innovation and the effectiveness of competition in payment systems.
Retail Fed Accounts Risk Bank Runs
- Retail Fed accounts could trigger bank runs as depositors shift funds for safety and interest benefits.
- Unlimited Fed accounts with interest risk destabilizing private banks and financial intermediaries.