21 May 2021 Josphat Kariuki
Jerome Powell States The U.S. Government Is Exploring Digital Currency Possibilities
The rise of retail adoption for cryptocurrencies, combined with China stepping up their digital yuan development, may push U.S. authorities into issuing a new type of central bank digital currency (CBDC), according to Federal Reserve Chair Jerome Powell.
Powell noted that the decision about exploring CBDC is "the beginning of what will be a thoughtful and deliberative process."
"Today we are in the midst of a technological revolution that is fundamentally changing our world, reshaping how we communicate, access information and purchase goods and services," Powell said in a video message, adding that "the Federal Reserve has been exploring the potential benefits and risks of CBDCs from a variety of angles, including through technological research and experimentation."
Central bank digital currencies, unlike cryptocurrencies, provide more stable characteristics due to their pegging to fiat currencies. Furthermore, CBDCs inherit the speed, transparency, and security of conventional cryptocurrencies.
However, Powell noted that decentralized stablecoins lack the centralized control of CBDCs, and still "carry potential risks" to consumers and financial systems.
The Federal Reserve U.S.-issued CBDC would act as a complement to fiat cash and current methods of U.S. dollar transactions. Designing such a currency would require deep analysis, which includes public comment.
In every case, whether or not the U.S. Federal Reserve would create a CBDC of its own, the financial authority would certainly be taking "a leading role in developing international standards for CBDCs," according to Powell.
The announcement from the Federal Reserve Chair comes amid China continuing its development on the government-issued DC/EP CBDC, tied to the Yuan, which is rumored to go live by the time of the 2022 Winter Olympics in Beijing. However, some experts believe that that a U.S. CBDC is likely to take much longer.
David Treat, leader of the blockchain practice for Accenture, stated that "it's going to take some time to do it right."
"We're talking about a four- or five-year journey to real availability and usage and a lot of learning that has to happen between now and then to make sure how it's implemented fits with each country's social values and laws," Treat added.Cryptocurrency central banks currency cryptocurrency news crypto news digital Government US federal reserve Jerome Powell CBDC