Federal Reserve Chairman Jerome Powell has addressed concerns about the central bank’s plans for a digital currency. He stated that they are simply staying up to date with developments in digital finance and have not made any decisions about creating a retail central bank digital currency (CBDC).
Powell also clarified that any CBDC would require legislation from Congress and the president, and they are currently far from proposing such legislation. He emphasized that the Fed is not secretly working on a CBDC and has no plans to spring one on Congress.
Some Republicans, however, have expressed fears that the Fed is plotting to launch a CBDC without proper oversight. They have cited China’s digital yuan, which has strong surveillance capabilities, as a reason for their concerns. However, a new study suggests that these fears may be overblown and that digital currencies may not pose a threat to the US dollar as a global reserve currency.
Meanwhile, a stablecoin bill proposed by Rep. Patrick McHenry is facing challenges in Congress. McHenry and Rep. Maxine Waters have a potential framework for the bill, but there are disagreements about who will oversee payment stablecoins. The bill’s fate remains uncertain, and with the legislative term coming to an end, its chances of passing are slim.
Additionally, a recent academic study has found that digital currencies may struggle to become an accepted form of payment in many countries. It suggests that countries with authoritarian regimes, who are at odds with US monetary dominance, are likely to ban digital currencies. However, some countries with high inflation rates have seen the popularity of dollar-based stablecoins.
Overall, the future of digital currencies and their potential impact on the global economy is still uncertain. It is important for governments and central banks to stay informed about developments in digital finance and carefully consider the implications before making any decisions.
