During a testimony before the U.S. Financial Services Committee on Wednesday afternoon, Federal Reserve Chairman Jerome Powell made it clear that while the central bank continues to study the potential of the digital dollar, it will not be forced to launch one or commit suicide for external pressure.
Furthermore, he noted that when the United States launches a sovereign digital currency, it can create cryptocurrencies like Bitcoin or Stablecoin, like Titer. Asked by correspondent Stephen Lynch (D-MA 7th), Powell said, “One of the arguments being put forward, especially in favor of digital currency, is that you don’t need stablecoins. If you had digital US currency, you wouldn’t need cryptocurrency.” There will be digital currency about the potential benefits of taking effective action.
Currently, the Fed is working on a report expected to be published in September, pushing back from July that what should be considered in the case of digital payment forms such as crypto would further increase the benefits, risks and considerations. Resources, stability and the formation of a CBDC. The Fed partnered with the MIT Digital Currency Initiative to explore the concept of a CBDC last year.
In the case of proper regulation and in the case of the CBDC, to raise questions about how it can truly benefit the public, and benefits of this whole group and payment process, which we think is at an important stage? “Powell says that’s exactly what the study will look like.”
That said, one might argue that America is lagging behind in terms of CBDC development. China is moving closer to implementing the digital yuan, last year the Bahamas first went directly with the CBDC, and today the European Central Bank launched the next phase of its Digital Euro project. In fact, according to a January 2021 survey by the International Settlement Bank, 86% of central banks have begun to explore CBDC in any size or shape.
These developments are not lost on certain lawmakers During interrogation, Rep. Lynch expressed concern to Powell that the Fed could inadvertently abandon its position as a reserve currency in the United States if it took too long to explore the idea of a CBDC.
That said, Powell remains adamant that there is no other competitor to U.S. status as a reserve currency. “The US reserve currency. There are really no good competitors out there because all the things you need to have in reserve currency are really in the hands of the United States. ”On entering the CBDC, Powell warned that there are risks as well as advantages but note that it depends on the situation in each country.
Finally, Representative Patrick McHenry (R-NC 10th) investigated Powell’s concerns about the implementation of digital assets such as stability, which has grown in popularity with the announcement of the settlement of Visa even paying its competitors in US dollars. Industry leader Tether.
In response, Powell compares static coins to money market funds and even bank deposits but adheres to both without rules. Paul notes that historically the United States has historically had a strong regulatory framework for other assets, such as money market funds, but there are limited rules for digital assets such as stability. For stability it doesn’t really exist and if they are going to be a significant part of the payment universe, which we don’t think can be crypto resources or even stable, we need a proper regulatory structure that we don’t have,” Powell said.