The US already has a „dynamic secure and active domestic payment system,“ Powell argued.
Better to do right than to be the first with CBDC, says chairman of the EUANOTICS Fed
The United States will not issue a digital dollar until the Federal Reserve resolves all issues surrounding a potential digital central bank currency (CBDC), according to Fed Chairman Jerome Powell.
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Powell said he is not concerned that other countries have the advantage of pioneering CBDCs.
Speaking at a panel on Monday on cross-border payments sponsored by the International Monetary Fund, Powell said:
„We have not made the decision to issue a CBDC and we think there is still a lot of work to be done. […] Actually, I think the CBDC is one of those issues where it is more important for the United States to get it right than to be the first. ”
Powell elaborated that „getting it right“ means that the US is not only looking at the potential benefits of a CBDC, but also at the potential risks – especially given the fact that the US dollar is the world’s reserve currency.
He noted that countries around the globe will have their own Bitcoin Machine motivations for issuing a CBDC. He argued that the main focus for the US would be to determine „whether and how a CBDC could improve an already secure and active dynamic domestic payment system“. Powell continued:
„Unlike some jurisdictions, here in the US we continue to see a strong demand for money. In addition, we have robust and mature financial and banking sectors, and we have a highly integrated population in the banking system, so that many, though not all, already have access to the electronic payment system“.
The president of the Fed emphasized that the bank will not make a decision on issuing the digital dollar until it addresses the risks associated with the CBDC regarding cyber attacks, financial stability, privacy and security. He said:
„In addition to assessing the benefits, there are also some very difficult political and operational issues. […] Just to name a few, I would like to mention the need to protect a CBDC from cyber attacks and fraud; the question of how a CBDC would affect monetary policy and financial stability; and also, how the CBDC could prevent illicit activities while preserving the privacy and security of the
Powell’s observations occur across a number of global jurisdictions actively researching and testing CBDCs. Countries such as Russia and Japan are among the last countries to join the CBDC, while jurisdictions such as China and Sweden began testing their next digital currencies in 2020.
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Despite the growing popularity of the technology worldwide, US citizens are also sceptical about the idea of the digital dollar. According to a recent survey, more than 50% of Americans are opposed to the issuance of such an asset by the Fed. At the end of September, the Federal Reserve Bank of Cleveland revealed details of the Fed’s ongoing survey of a potential digital dollar.