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Federal Reserve Board governor Michelle Bowman shared her views on financial innovation in a speech at Harvard Law School on Oct. 17. Bowman has spoken several times on the topic, and her position seems to be growing more bearish. 

Bowman spoke at length about central bank digital currency (CBDC) and stablecoin. She also considered “unified ledger” technology and distributed ledger technology as a bridge between existing systems, as well as ways to improve existing technology. She repeated questions she has raised before about the need for such innovations and suggested that banks can play a role in preventing government overreach:

“The U.S. intermediated banking model helps to insulate consumer financial activities from unnecessary government overreach, and I believe this is an appropriate model for future financial innovation.”

Bowman, a Republican, is echoing concerns that are increasingly heard among politicians, from congresspeople to governors, although she did not elaborate on exactly how banks prevent overreach.

A CBDC could lead to bank disintermediation if not “properly” designed, she said. Moreover, the financial system faces issues such as “frictions within the payment system, promoting financial inclusion, and providing the public with access to safe central bank money,” but she saw no compelling arguments for the superiority of CBDC over other alternatives.

In particular, Bowman saw no advantage in CBDCs over the FedNow service introduced in July. The Fed has stated that it would not issue a U.S. dollar CBDC without a congressional mandate.

Related: US Federal Reserve Banks say stablecoins could ‘become a source of financial instability’

Bowman also reiterated her call for a regulatory framework for financial innovation on the principle of the same regulation for the same risks. The low level of regulation of stablecoins was her main argument against their use.

Some frictions in the payment system are there by design, according to Bowman. “Perceived payment limitations do not always stem from problems with existing technology, but rather from existing policies, laws, and even consumer and business preferences,” she said, mentioning Anti-Money Laundering and prevention of overreach as examples.

Bowman spoke up for research, including on CBDC. In this respect, she has broken with some politicians. “The Federal Reserve remains open to multiple options to improve the payments landscape,” she said.

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