According to FED Chairman Jerome Powell, the US will not unveil a digital dollar unless all the questions surrounding it are resolved.
Responding to concerns that other countries were closing in on finalizing their digital currencies and unveiling them, Powell said that he was unfazed. He also seemed quite unbothered by the criticism the US has been getting for not showing urgency in the development of a CBDC.
While speaking to an International Monetary Fund panel on Monday, Powell said,
“We have not made a decision to issue a CBDC, and we think there’s a great deal of work yet to be done. In fact, I actually do think that CBDC is one of those issues where it’s more important for the United States to get it right than it is to be first.”
Getting it right!
According to Powell, getting it right is not just about getting the benefits of a CBDC, it’s also about looking at the risks especially since the dollar is the world’s reserve currency. Powell is of the opinion that other countries have their own motivations for issuing CBDCs and that shouldn’t concern the U.S too much.
The main focus for the U.S according to him is; “whether and how a CBDC could improve an already safe and active dynamic domestic payment system.”
“Unlike some jurisdictions, here in the United States we continue to see strong demand for cash. 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 payment system.”
Powell said that the FED would not make a decision on moving forward with a CBDC until associated risks that have to do with CBDCs are addressed. The risks associated here are; security, privacy and cyber-attacks and financial stability.
“In addition to assessing the benefits, there are also some quite difficult policy and operational questions. Just to mention a few, I would mention the need to protect a CBDC from cyber-attacks and fraud; the question of how a CBDC would affect monetary policy and financial stability; and also how could CBDC prevent illicit activity while also preserving user privacy and security.”
US walking its own path
Powell’s remarks imply that the US is engaged in its own process and is not rushing to compete with the likes of Russia and Japan in terms of launching time. US citizens are also skeptical when it comes to the idea of a digital dollar. A recent survey showed that half the country was opposed to the idea of a digital dollar. It may, therefore, take a while before we start to see some real momentum towards the introduction of a digital dollar.
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