While recognizing that CBDC proposals are often driven by laudable goals, the American Bankers Association has cautioned that the introduction of a CBDC could “fundamentally change the role of the central bank in the United States and reshape the banking system.”

In a statement for the record of a Senate Banking subcommittee hearing, ABA notes that choosing between the various CBDC designs requires “serious and complex policy tradeoffs” and that too often CBDC proponents take a “highlight reel” approach to describing CBDC, “cherry picking all the perceived benefits, while downplaying the serious risks to consumers and our financial system.”

The banking trade body points out that the US already has a robust and well-functioning financial system, with banks already providing lending, deposit-taking, and payments services to consumers.

After reviewing the benefits and risks of various proposals to implement a CBDC, ABA concludes that “it does not appear that a CBDC is well-positioned to enhance underlying financial capabilities or extend the reach of financial services in well-developed markets.”

Should policymakers decide to move ahead with development of a CBDC, the association urged them to do so with caution and carefully consider the risks and benefits of various CBDC designs.

“Given the additional complexity, delay, and transition costs involved in creating a new form of money, there are strong efficiency interests that suggest CBDC should only be pursued as a final option to meet clearly-defined public policy goals that cannot be achieved through payments innovations that leverage existing digital dollars. As of today, those use cases have not emerged,” ABA said. “If a viable use case for CBDC in the United States does emerge in the future, design choices must be carefully considered to ensure that the benefits as well as the risks of introducing a CBDC are fully appreciated.”