Federal Reserve Chairman Jerome Powell confirmed that the body is making progress on its plans to issue its own digital currency. The head of the US central bank said that the Fed is preparing a document on the matter that will be published soon.
Powell reported that the Fed’s board has not made the decision yet. Meanwhile, most of the central banks of the world’s richest nations, including the European Central Bank (ECB) and the Bank of China, are already well advanced in their fiat digital currency projects.
However, the Fed chief says the body does not feel pressured to do something quickly.
On The Flipside
The Fed, the Commodity Futures Trading Commission, and the Office of the Comptroller of the Currency are known to not only work on regulation projects, but on the issuance of cryptocurrencies.
“I think it’s important that we get to a place where we can make an informed decision about this and do so expeditiously,”
Powell said during a news conference. He said the United States is not behind in this regard.
“I think it’s more important to do this right than to do it fast.”
The official explained that the Fed is “working proactively to assess whether it will issue a CBDC and, if so, in what form.” Washington lawmakers, the Fed, the Treasury, and other regulators are concerned about the future of digital money (CBDC and stablecoins).
Defenders and Detractors of Digital Money
The establishment of a fiat digital dollar, controlled by the state, is a short-term objective of the Fed, according to what it has been saying for more than a year. The bank has been conducting a series of consultations in conjunction with other financial sector agencies.
Within the Fed there are several proponents of the fiat digital currency project. One of them is Boston Fed Governor Lael Brainard, who has joined this project together with MIT.
They believe that a digital dollar would be more effective for the payment system. But instead there are others like the vice president of supervision, Randal Quarles, who have their doubts about these efforts.
Benefits for the Financial System
In defense of the digital currency issued by the central bank, Brainard claims that it would bring multiple benefits to the financial system. He mentions receiving payments more quickly for people especially in times of crisis and also providing services to the unbanked.
“We think it’s really important that the central bank maintain a stable currency and payments system for the public’s benefit. That’s one of our jobs,”
Powell said.
He spoke of driving a “transformational innovation” for the area of digital payments. He also said that the Fed continues to work on plans on this issue and on the development of its own system such as FedNow, which could be online in 2023.
According to Powel, the test for the establishment of a CBDC is “if there are clear and tangible benefits that outweigh the costs and risks.”
However, the pressure being exerted by news coming from around the world related to the advancement of digital currencies from central banks is difficult to hide. The desire to compete against private stablecoins on the part of governments has made these projects advance by leaps and bounds.
Why You Should Care?
He believes that the Fed will surely need authorization from Congress if it decides to move forward on the US digital currency.
“When it comes to public money, we have to make sure that there are the right regulatory protections in place, and today there really aren’t in some cases,”
Powell said.
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Source: Cryptocurrency - investing.com
