Federal Reserve Chairman Jerome Powell to Speak About Digital Currencies Today

Federal Reserve Chairman Jerome Powell to Speak About Digital Currencies Today

"We do think it's more important to get it right than to be first and getting it right means that we not only look at the potential benefits of a CBDC, but also the potential risks, and also recognise the important trade-offs that have to be thought through carefully", Mr Powell said in a panel discussion on digital payments hosted by the International Monetary Fund. "Complementary efforts are also now underway, for example through the Federal Reserve Bank of Boston, which, in collaboration with researchers at MIT (Massachusetts Institute of Technology), is developing a hypothetical central bank digital currency".

China, which has been leading the charge when it comes to implementing a national virtual currency or central bank digital currency (CBDC), has publicly confirmed that it plans to become the first nation to challenge the global dominance of the USA dollar.

Unlike some jurisdictions, here in the United States we continue to see strong demand for cash.

Kazushige Kamiyama, the head of BOJ's payment and settlement systems unit that's now managing the CBDC project, acknowledged that China has the first-mover's advantage on issuing a virtual currency. Dubbed the 'digital ruble, ' the CBDC would be issued centrally by the bank, to facilitate digital fiat transactions on the blockchain. "We can be, and we must be at the forefront of research". Powell said, "We will have lots of conversations with industry and stakeholder engagement, and that'll help us in our work on digital currencies and cross-border payments". The question of how the implementation of a CBDC would impact monetary policy and financial stability in the country, an issue the chair indicated that it had to be considered before going all-in on digital currencies. China, the world's second-largest economy, is already testing the digital version of yuan, also known as Digital Currency Electronic Payment (DCEP).

The announcement of the Libra project drew immediate backlash from lawmakers and regulatory officials, who expressed concern that the social media giant would not adequately address anti-money-laundering and Bank Secrecy Act requirements.

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