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Jerome Powell (FED): no rush for the CBDC
Jerome Powell (FED): no rush for the CBDC
Blockchain

Jerome Powell (FED): no rush for the CBDC

By Eleonora Spagnolo - 15 Jan 2021

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The Federal Reserve is studying CBDCs (Central Bank Digital Currencies), although it does not yet have a precise plan for their eventual launch, or at least that is what Chairman Jerome Powell said. 

He said this during an interview with Yahoo Finance, covering inflation, the role of central banks, and the Covid-19 crisis. 

In short, the Fed has no urgency to issue its digital currency:

“We’re not in a hurry, we don’t have to be first, we already have a first-mover advantage as we are the reserve currency. CBDCs have both benefits and potential costs, and a number of unresolved questions. We are examining the technology that makes them possible”.

The problem is that there are some private actors – says Jerome Powell – who are going to issue their own currency. He never mentions it, but the reference could be to Diem (formerly Libra), the Facebook project that should see the light in 2021. It’s something we’ve seen before and which ended with the discovery that such money was not money.

“That’s a really bad thing we need to avoid. So we’re gonna look at it very very carefully, we’re investing heavily in understanding the technology and analysing the policy questions”. 

On the subject of stablecoins, Jerome Powell explains that they are watching them very closely too, because they are becoming systemically important. That’s why the Fed will not sit back and do nothing, but will intervene to regulate them. Indeed, Jerome Powell says that this is an issue he also discusses with his global colleagues (he probably refers to the heads of the ECB and other global central banks), calling stablecoins a “high priority“. 

Jerome Powell, the Fed and the CBDC

This is not the first time it has emerged that the Fed is working on its CBDC, dubbed the digital dollar. Rumours of studies and tests have been going on for a year now. The United States should certainly be concerned not so much about stablecoins such as Tether (which has reached a capitalization of $20 billion), but about similar projects in other countries.

For example, China has been testing its digital yuan for some time. This currency, when released, could also be used beyond the country’s borders. In short, in addition to becoming the currency of one billion people (as many as there are in China), it could become global and threaten the sovereignty of the dollar. This is why neither the Fed nor its Chairman Jerome Powell can overlook the CBDC issue. 

Eleonora Spagnolo
Eleonora Spagnolo

Journalist passionate about the web and the digital world. She graduated with honours in Multimedia Publishing at the University La Sapienza in Rome and completed a master's degree in Web and Social Media Marketing.

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