The US Federal Reserve is evaluating the prospects of introducing a digital currency for the nation but insists that it has not yet decided on this matter. While speaking at a news conference on September 22, Fed Chair Jerome Powell stated that the bank was studying the merits of creating a digital dollar and has some plans to issue a paper on this matter.
Powell said that there is no pressure to rush any CBDC development plans. While fielding questions at the news conference, he said:
“We are working proactively to issue a CBDC and if so, in what form. We think it is our obligation to do the work both on public policy and technology to form a basis for making an informed decision. The ultimate test we will apply when assessing a central bank digital currency and other digital innovations is that there are clear and tangible benefits that outweigh any cost and risks.”
Despite many central banks launching their in-house CBDCs, Powell said that the Fed is not rushing to join the trend. Based on the Fed Chair, the focus is not on speed but on getting everything right while saying that the United States was not behind the curve on central bank digital currency innovation.
CBDCs have come to the limelight in the anti-cryptocurrency narrative espoused by global banking regulators and government policymakers. Based on previous reports, HSBC has come out to support CBDCs while opposing cryptos and stablecoins.
The crypto critics in the US, including Senator Elizabeth Warren, have said that CBDCs are “legitimate digital public money” when compared to cryptocurrency, which the Senator has always condemned.
Earlier this month, James Mackintosh, a Wall Street Journal columnist, stated that CBDCs may catalyze “deeply negative interest rates.” Chris Waller, the Fed governor, has previously insisted that CBDCs have no real-life value referring to them as “a solution in search of a problem.”