A Digital Dollar for the Unbanked? Banks, Consumers See Pitfalls

The debate over whether the Fed should roll out a digital US dollar has led to a rare alignment among banks, consumer advocates, and lawmakers who are skeptical of claims that the currency would boost financial inclusion for lower-income Americans and minorities.

Federal Reserve officials have suggested that a digital dollar would reduce barriers and transaction costs to “unbanked” consumers who lack access to traditional financial services such as checking accounts or loans. It’s an argument that cryptocurrency enthusiasts have been making for years about bitcoin and other private digital offerings.

But skeptics say a Fed-issued digital dollar would potentially ...