What business could possibly justify keeping a bank account when bank accounts are insured only to $250,000, and digital dollars are backed by the federal government to an unlimited degree?
What consumer will keep their bank accounts open, paying monthly maintenance fees and high transaction fees, when a free or low-cost option is available instead?
If the Fed’s digital dollar is actually worth using, businesses and consumers will withdraw their money from bank accounts en masse to move that money into cheaper and safer federal reserve accounts.
In other words, the introduction of a Federal Reserve digital dollar will result in a massive bank run the likes of which are almost unimaginable, simultaneously across the entire sector. Even if a substantial number of bank customers initially choose not to move their money, enough will choose to do so to make the operation of many (if not most) banks economically unviable. More than one bank will fail, which will cause real pain felt by ordinary people. The banks that don’t fail will effectively transfer much of their business over to the Federal Reserve.
Janet Yellen’s justification for this initiative is that payments today are too expensive. She may be right.
Who here, though, thinks that the solution to that pricing problem is a disorderly nationalization of the United States banking system, as well as that of much of the world, by the United States government?
Who thinks that the risks of a disorderly restructuring of the entire banking sector are worth it? Is there not some other way to achieve the same goals?