U.S. Treasury’s Yellen: Attentive to Spillovers of Macroeconomic Tightening from Advanced Economies to the Rest of the World

Thank you, Professor Jackson, and thank you to the Harvard National Security Journal for the invitation to speak at this symposium. As the payment system continues to evolve rapidly and the volume of digital assets continues to grow, it is critical to ensure that we keep both the benefits and risks of digital assets in the policy conversation, including the implications for America's role in the global economy and its place in the world. My speech today focuses on exactly this issue and on an aspect of the digital asset world that is now the center of domestic and international attention—central bank digital currencies (CBDCs) and how they relate to the substantial international role of the U.S. dollar.1 In January 2022, the Federal Reserve Board published a discussion paper on CBDCs to foster a broad and transparent public dialogue, including the potential benefits and risks of a U.S. CBDC.2 To date, no decisions have been made by the Board on whether to move forward with a CBDC. But my views are well known. As I have said before, I am highly skeptical of whether there is a compelling need for the Fed to create a digital currency.3 I am not a national security expert. But one area where economics, CBDCs, and national security dovetail is the role of the dollar. Advocates for creating a U.S. CBDC often assert how it is important to the long-term status of the dollar, particularly if other major jurisdictions adopt a CBDC. I disagree. As I will discuss, the underlying reasons for why the dollar is the dominant currency have little to do with technology, and I believe the introduction of a CBDC would not affect those underlying reasons. I offer this view, again, in the spirit of dialogue, knowing how tweet at 12:15pm: Fed’s Waller: I Disagree That Creating a U.S. Central Bank Digital Currency Is Important to Long-Term Status of Dollar - Don’t Think There Are CBDC Implications for the Role of the U.S. in Global Economy, Financial System tweet at 12:15pm: Fed’s Waller: Debate on CBDC Should Center on Financial Stability, Improvements to Payments System, Financial Inclusion https://t.co/Yaz6EBbcvy