The Fed has been investigating the pros and cons of a digital dollar for several years, publishing a discussion paper on the issue in January 2022.

At a Harvard Law School event on Tuesday, Bowman argued that the US has a “safe and efficient” payments system that is already evolving with “responsible innovations, notably the recently-launched FedNow.

She continued: “Future innovations may further build upon these services to more effectively address payment systems frictions and financial inclusion. It is quite possible that other proposed solutions may address many or all of the problems that a CBDC would address, but in a more effective and efficient way.”

Meanwhile, a retail CBDC could have unintended consequences for the US banking system and considerable consumer privacy concerns, said Bowman.

“If not properly designed, a CBDC could disrupt the banking system and lead to disintermediation, potentially harming consumers and businesses and presenting broader financial stability risks.”

Despite her scepticism, Bowman said that she sees value in continuing to research CBDCs, noting the “interconnected and global nature of the financial system”.

Fed chair Jerome Powell has remained noncommittal on the chances of a digital dollar but governor Christopher Waller has declared himself “highly sceptical” that there is a compelling need for one, adding that its “remains a solution in search of a problem”.

Fed supervision chief Randal Quarles has gone further, suggested that CBDCs could be an embarrassing fad, comparable to the parachute pants made famous in the 1980s by rapper MC Hammer.