Federal Reserve Chairman Jerome Powell stated that the United States will not issue digital dollars until the Fed resolves all issues surrounding the potential central bank digital currency (CBDC).
Powell claimed that he is not worried that other countries have a first-mover advantage in issuing CBDC.
On Monday, Powell stated at a cross-border payment symposium hosted by the International Monetary Fund (IMF):
“We have not yet decided to issue a CBDC, and we think there is still a lot of work to be done. In fact, for the United States, it is more important for the United States to do it right than to be the first step on the issue of CBDC.”
Powell explained that “doing it right” means that the United States must not only consider the potential benefits of CBDC, but also the potential risks, especially considering the fact that the US dollar is the world’s reserve currency.
The official pointed out that countries around the world have incentives to issue CBDC. He believes that the main focus of the United States will be to determine “whether and how CBDC can improve an already safe and active dynamic domestic payment system.” Powell continued:
“Unlike some jurisdictions, in the United States, we continue to see strong demand for cash. In addition, we have a sound and mature financial and banking industry, so many people (though not everyone) already have access to electronic payment systems. “
The chairman of the Federal Reserve emphasized that the Federal Reserve will not decide to issue digital dollars until it addresses the risks of cyber attacks, financial stability, privacy and security related to CBDC. He said:
“In addition to assessing the benefits, there are also some quite difficult policy and operational issues. I will only mention a few questions: I feel it is necessary to protect CBDC from cyber attacks and fraud; how CBDC will affect monetary policy and financial stability; in addition, CBDC How to protect users’ privacy and safety while preventing illegal activities.”
When Powell made the above remarks, many jurisdictions around the world are actively exploring and piloting CBDC. Countries such as Russia and Japan are the latest countries to join the CBDC ranks, while countries such as China and Sweden will begin testing their upcoming digital currencies in 2020.
Although CBDC is becoming more and more popular around the world, American citizens are skeptical of the idea of a digital dollar. According to a recent survey, more than 50% of Americans oppose the Federal Reserve issuing digital dollars. In late September, the Cleveland Federal Reserve Bank disclosed details of the Fed’s ongoing research on potential digital dollars.
