Jerome Powell, chair of the US Federal Reserve said the department does not intend to launch a CBDC anytime soon
Powell averred that the Fed was taking a slow but sure approach on Central Bank Digital Currencies (CDBCs) as they could threaten the monopoly enjoyed by the US dollar. Speaking at a webinar event hosted by Princeton University yesterday, the Fed chair added that there was no rush in delivering a digital currency in the country.
“We don’t feel an urge or need to be first. We […] already have a first-mover advantage because [the U.S. dollar is] the reserve currency.”
He gave an estimate of ‘years rather months’ for the Federal Reserve to develop and launch a digital currency. Powell revealed that the Fed is still heavily invested in the technology and trying to find solutions to the various challenges that a digital currency poses.
“We’re going to look at it very, very carefully. We’re determined to do this right rather than quickly, and it will take some time—measured in years rather than months.”
Powell also stated that the development of a CBDC will require the involvement of financial sector participants, elected representatives and the general public. He asserted that there was a need to understand the good and bad sides of a digital currency as well as its potential use cases.
On the subject of stablecoin, Powell described the progress on stablecoins as a priority for the department.
“So that’s been a high-level focus and that will continue to be a high-level focus because they could become systemically important overnight and we don’t begin to have, you know, our arms around the potential risks and how to manage those risks and the public will expect we do and has every right to expect that”, the Fed chair said. “So that’s something [stablecoins] we’ve been working on with our colleagues around the world and that will go on as well. It’s a very high priority“.
It is barely a month since the Treasury-centric Working Group on Financial Markets compiled a report recommending the restriction of multi-currency stablecoins. Powell’s comments reflected on The Fed governor’s take on stablecoins. In August last year, the governor had said that stablecoins posed “questions about legal and regulatory safeguards, financial stability and the appropriate role of private money”.
Powell reiterated the importance of stablecoin regulation saying, “Clearly there’s a need for, and we’ve been very focused as you know, on better regulatory answers for potential global stablecoins, in particular“.