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“Irrespective of the conclusion we ultimately reach, we expect to play a leading role in developing international standards for CBDCs,” said the Fed chair.
Jerome Powell, chairman of the Federal Reserve, stated that the government agency is pushing forwards with research to introduce a central bank digital currency.
In an announcement from the Fed today, Powell said the Federal Reserve Board would be issuing a discussion paper sometime this summer, calling for the U.S. public to comment “on issues related to payments, financial inclusion, data privacy, and information security.” While the Fed chair said crypto was not a “convenient way to make payments” given its volatility, he was seemingly more open to stablecoins and a central bank digital currency, or CBDC.
“Our key focus is on whether and how a CBDC could improve on an already safe, effective, dynamic, and efficient U.S. domestic payments system,” said Powell. “We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks.”
According to Powell, designing a CBDC in the United States would necessitate public and elected official input due to the “important monetary policy, financial stability, consumer protection, legal, and privacy considerations.” The new discussion paper would supplement the Federal Reserve’s ongoing study into the costs and benefits of issuing a digital currency.
“Irrespective of the conclusion we ultimately reach, we expect to play a leading role in developing international standards for CBDCs, engaging actively with central banks in other jurisdictions as well as regulators and supervisors here in the United States throughout that process.”
Powell has spoken widely on the potential consequences of the United States issuing a CBDC, emphasising that he believes it is more important “to get it right than to be first.” In February, he hinted that the Fed would “engage with the public pretty actively” before launching a digital currency, but he did not rule out the idea first going to policymakers.