Jerome Powell Says The Fed Plans Recommendation To Congress For CBDC

June 24, 2022 4:22 pm Comments

The chair of the Federal Reserve, Jerome Powell, just revealed that the Federal Reserve plans to recommend to Congress the rollout of a central bank digital currency.

Powell shared his thoughts and essentially stated that it is indeed something that the country needs to explore which hints that CBDCs may be something that is inevitable.

If it does actually happen, it would be the greatest financial innovations in modern history and would likely redefine how the financial system works worldwide.

With that being said, this will need the approval of Congress and that the roll out of a digital dollar would likely have to be handled by the government itself rather than a company.

CoinDesk reports:

The Fed issued a report on the question of a digital dollar earlier this year, and officials are still combing through the responses from the crypto industry, traditional financial firms and investors. Those answers are likely to inform the Fed’s eventual recommendation.

In March, Powell said that the Fed wouldn’t continue exploring the launch of a CBDC without congressional intervention.

On Thursday, he noted that if the U.S, were to roll out a digital dollar, it would have to be issued by the government rather than by a private company.

“One question around CBDCs is do we want a private stablecoin to wind up being the digital dollar? I think the answer is no,” he said.

“If we’re going to have a digital dollar, it should be government-guaranteed money, not private money.”

The timeline for when this will happen is still largely unknown, but some investors are speculating that it could happen sooner than expected.

After all, the majority of central banks around the world are already conducting pilot tests for central bank digital currencies where many have plans to implement within the next few years.

As a result, it would seem unlikely that the Fed would willingly delay this and and miss out on all the potential opportunities.

Powell has testified before in front of Congress where he called for better regulatory reform for the crypto industry which includes establishing a clear framework.

BusinessInsider concludes:

When asked about the Fed’s next steps regarding the rollout of a CBDC, Powell told U.S. lawmakers in a Thursday monetary-policy hearing that “it’s something we really need to explore as a country” and that “it should not be a partisan thing.”

“It’s a very important potential financial innovation that will affect all Americans,” he said.

“Our plan is to work on both the policy side and the technological side in coming years and come to Congress with a recommendation at some point.”

Some investors are also expecting that the current economic uncertainties may also accelerate development of CBDCs as concerns regarding inflation and rising gas prices persist.

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