Business

Federal Reserve Chair looking into the benefits of digital currencies

Share
Federal Reserve Chair looking into the benefits of digital currencies

Federal Reserve Chairman Jerome Powell revealed that the U.S.is still "evaluating" the benefits of a digital currency during a virtual conference on cross-border payments hosted by the International Monetary Fund (IMF) on October 18. As a matter of fact, the Central Bank of the Bahamas has perfected its plans to launch its CBDC dubbed the Sand Dollar sometime next week, and also with an ambitious plan to deploy the digital currency beyond the shores of the Bahamas.

Within the scope of the researches, it was stated that the development of payment instruments, the introduction, design and possible results of the digital central bank currency (CBDC) are also included.

"We think it's important that any potential CBDC would serve as a complement to, and not a replacement for, cash and current private sector digital forms of the dollar such as commercial bank money", he said. "Moreover, we have robust and mature financial and banking sectors, and we have a highly banked population so that many - although not all - already have access to the electronic payments system".

Powell added that besides the benefits that such a currency can bring to the United States, some hard policy and operational questions needed to be answered before taking a leap of faith into the CBDC.

A key part of this program is the monitoring framework for money and payments and the contingency planning for a central bank digital currency (CBDC). This isn't the first time Powell has discussed digital currencies. The question of how the implementation of a CBDC would impact monetary policy and financial stability in the country, an issue the chair indicated that it had to be considered before going all-in on digital currencies.

The central bank proposals are created to sit alongside a new law regulating the issuance of digital securities and digital currencies, in an attempt to better inform regulatory oversight of digital assets in Russian Federation.

"Yes, there are potential benefits, but that's going to take a lot of work and thought, we believe", Powell said.

Libra did highlight the need to revamp cross-border payments, Powell said, and did focus more attention on payments issues.

Share