Don961: Jerome Powell: Issuing an American digital currency may reduce the need for alternatives
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Federal Reserve Chairman Jerome Powell said one of the strongest arguments for the US central bank to issue a digital currency is that it may reduce the need for private alternatives such as cryptocurrencies and stablecoins.
Asked during a congressional hearing whether the Federal Reserve’s issuance of a digital currency would be a more viable alternative to having multiple crypto or stablecoins in the payments system, Powell said he agreed with that view.
“I think that might be the case, and I think that’s one of the arguments being made in favor of digital currency… that, in particular, you don’t need stablecoins, you don’t need crypto if you have one,” Powell said during the hearing before the US House Financial Services Committee. American digital — I think that’s one of the strongest arguments in her favour.”
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Powell said Fed officials will broadly examine the world of digital payments in a discussion paper that may be published in early September. He described the paper as a major step accelerating the council’s efforts to determine whether it should issue its own digital currency.
Powell added that he doubted crypto assets would become a major tool for payments in the US, but said stablecoins might get more traction. He added that more regulatory measures are needed before stablecoins can have a greater role in the financial system.
“We have a very strong regulatory framework in terms of bank deposits, for example, or money market funds,” Powell said. “That doesn’t currently exist for stablecoins, and if they are going to become an important part of the payments world, which we don’t think it will be for crypto assets but maybe for stablecoins. So we need an appropriate regulatory framework.” LINk