The President and CEO of the Federal Reserve Bank (Fed) of New York, John C. Williams, delivered a speech on the technological transformation of digital payments, commenting mainly on stablecoins, CBDCs and the role of the central bank.
New York Fed: President comments on booming development of digital currencies
John C. Williams, President and CEO of the New York Fed, delivered a speech in honour of the Monetary Policy Implementation Workshop, organized with Columbia University’s School of International and Public Affairs, commenting on the boom in the development of digital currencies and payments technology.
First of all, Williams compared the evolution of music and its listening devices from the phonograph of 1877, to the CDs of the 1980s, to the iPods of the 2000s, stating how technology has improved in cost and convenience the very action that has remained the same over time: listening to music.
Speaking of technological developments in the field of payments, Williams himself mentioned digital currencies. Here’s what he said:
“The same is true with money and payments. […] On top of that, the development of digital currencies has boomed. This includes cryptocurrencies that are not fully backed by other assets. It also includes stablecoins that are fully backed by safe and liquid assets, and central bank digital currencies (CBDC)”.
New York Fed President and focus on stablecoins and CBDCs
Continuing with his speech, Williams went on to focus on stablecoins and CBDCs, both of which are fully backed by safe and liquid assets that he said have the potential to be the new way to hold money and make payments.
According to the New York Fed President, the risk of using these new digital payment methods is being sustained by the role of the central bank, which, as with music over the years, remains the same.
In this regard, here is Williams’ comment:
“Turning to the future, the big question is what a world of digital currencies like stablecoins and CBDCs would mean for the implementation of monetary policy. How will central banks anticipate and adapt to the changing landscape brought on by the possibility of digital currencies?”
The digital dollar experiment
It was March 2022, when a bill was introduced in Congress to replace cash in digital form.
A new experimentation of the digital dollar was requested from the US government, through the ECASH Act.
In fact, as early as January 2022, the US central bank had opened a debate to see what the long-term effects of the US adoption of the digital dollar might be.