Central Bank Digital Currencies: Neel Kashkari’s Candid Take

Fireside Chat Highlights

During the Minnesota Transportation Conference and Expo, Neel Kashkari, President of the Minneapolis Federal Reserve Bank, shared insights on several topics, with a focus that somehow managed to dodge cryptocurrency and blockchain. However, he couldn’t escape the Q&A portion where the hot topic of central bank digital currencies (CBDCs) came up.

What’s The Big Deal About CBDCs?

Kashkari didn’t hold back, stating, “We’re studying it,” when it came to CBDCs. But let’s face it, it’s not like they’re rolling up their sleeves and jumping into the digital currency swimming pool just yet. According to him, it’s going to take an act of Congress to officially issue a digital currency. So, if you thought you could just send a quick email to the government asking for a CBDC, you might need to sit back down.

The Problem With Problems

The real kicker? Kashkari pointed out a fundamental issue – no one seems to know what problem CBDCs would exactly solve. He casually mentioned that sending money through Venmo works just fine. “I can send anybody in this room $5 right now using Venmo,” he quipped. In his view, if Venmo does the job, what’s the point of inventing a new wheel?

Privacy Concerns: Who’s Watching?

When discussing the motivation behind China’s push for a CBDC, Kashkari raised eyebrows. He seemed to point to a not-so-subtle possibility: “In theory, a government could monitor every one of your transactions with a central bank digital currency.” But here’s the rub—”We would not be in favor of that at the Federal Reserve.”
In a world where privacy issues are front and center, he assured attendees, “We have no interest in violating the American people’s privacies at the Federal Reserve.” That’s good to know; thanks for the reassurance, Neel!

Negative Interest? No Thanks!

Then Kashkari added another cherry on top of the skepticism sundae by discussing the implications of negative interest on accounts with CBDCs—an idea that sounds just as pleasant as stepping on a LEGO. “You can’t do that at Venmo, and we don’t want to do that at the Federal Reserve,” he said. So, let’s keep our financial nightmares contained, please.

Final Thoughts: Keeping an Open Mind

In a closing statement that echoed both caution and willingness to learn, Kashkari said, “I’ve developed a deep skepticism at this point, but I’m going to keep my mind open and see what the studies come up with.” Let’s hope those studies have fewer curveballs than his predictions about digital currency!