By
Tolu Ajiboye
April 17th, 2024
Since the dollar is important globally, it is essential that the Fed remains fully engaged in CBDC research and policy development. The Fed will release the results of its CBDC research very soon.
On Wednesday, Federal Reserve Chairman Jerome Powell said that the Fed is currently enhancing efforts to explore the costs and benefits of a central bank digital currency (CBDC). According to Powell, the Fed will soon release the research.
Jerome Powell stated:
“I think it’s important that we get to a place where we can make an informed decision about this and do so expeditiously. I don’t think we’re behind, I think it’s more important to do this right than to do it fast.”
“We’re working proactively to evaluate whether to issue a CBDC and, if so, in what form,” added he.
There is no final decision yet. However, crypto enthusiasts believe it is likely that the Fed will decide in favor of establishing its own digital currency.
Since the dollar is important globally, it is essential that the Fed remains fully engaged in CBDC research and policy development. In summer, Fed officials started broadly examining digital payments. As long as the Federal Reserve promotes monetary and financial stability and the safety and efficiency of the nation’s payment system, it will focus on this mission even if launching a digital currency.
Jerome Powell said:
“We think it’s really important that the central bank maintain a stable currency and payments system for the public’s benefit. That’s one of our jobs.”
Notably, Powell himself is not a fan of crypto. Earlier, he said he did not believe crypto-assets would become a major means of payment in the US, but stablecoins would have such a chance. But even if this happens, there is a need for the proper regulation of stablecoins.
“Where the public’s money is concerned, we need to make sure that appropriate regulatory protections are in place, and today there really are not in some cases,” explained Powell.
Difference of Opinion on CBDC
The Fed representatives are divided on the need for a CBDC. For example, Fed Governor Lael Brainard believes the United States can be a leader in the area, especially now, when other large economies such as China are moving more aggressively. Meanwhile, Fed Vice Chair for Supervision Randal Quarles as well as Fed Governor Christopher J. Waller are strongly against the concept of CBDCs.
“I remain skeptical that a Federal Reserve CBDC would solve any major problem confronting the US payment system. There are also potential costs and risks associated with a CBDC. It is my belief that government interventions into the economy should come only to address significant market failures,” said Waller earlier.
At present, 14 countries alongside China are running pilot projects of CBDCs, including South Korea and Sweden. Meanwhile, full-scale implementation of a CBDC has only happened in five countries. They are the Bahamas, Antigua and Barbuda, Saint Lucia, and two Caribbean countries.