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The Federal Reserve chairman said that they would opt for a public-centric approach on cryptocurrencies, however, would proceed with the digital dollar developments only after weighing the risks it poses to the US financial system.
While the CBDC developments across the world are catching up with the pace, everyone is closely monitoring any developments coming from the US. On Wednesday, February 24, disclosed additional details about their plans on the digital dollar. Speaking before the House Committee on Financial Services, Jerome Powell said that the US Federal Reserve would further “engage with the public” on the digital dollar this year. This is for the first time that Powell has given an official timeline for America’s CBDC developments.
Talking about the digital dollar project, Powell said:
“This is going to be an important year. This is going to be the year that we engage with the public pretty actively including some public events that we are working on, which I’m not going to announce today.”
Powell on Digital Dollar
Instead of taking upfront decisions and going to the public, Powell said the Fed would take an alternative approach. Rather, the Fed will directly talk to American citizens regarding the tradeoffs associated with the digital dollar project. Powell said:
“There are both policy questions and technical questions that relate between those two and they’re very challenging questions. We’re going to have a public dialogue … in the meantime we’re working on technical challenges and also collaborating and sharing work with other central banks around the world.”
However, Powell also maintains a cautious stand simultaneously. He stated that things will proceed further only after analyzing the risks to the stability of the US financial system. He also added that the digital dollar design should not “undermine … healthy market function.”
India Working on Its CBDC Project
On Wednesday, India’s central bank governor Shaktikanta Das said that the RBI has started its procedural developments to launch its digital currency in the country soon. “While we cannot guess the date of its launch, it is receiving our full attention,” he said.
However, Das has raised concerns that the use of public cryptocurrencies can undermine the country’s financial stability. The views of India’s monetary authority have been fundamentally opposed to the use of digital currencies. there have also been reports of introducing a ban for crypto use in India.
However, Das added that the Indian central bank is not opposed to the blockchain framework, the underpinning technology for cryptocurrencies. Instead, he added that they will leverage the blockchain’s benefits.