Powell claimed that the digital dollar does not contemplate a ban on private stablecoins. The report on a CBDC from the FED got scheduled for September 2021.
Jerome Powell highlighted that the report about cryptocurrencies and central bank digital currencies is ready to go and will get revealed in the upcoming weeks. This information got stated during a legislative hearing before US senators this Tuesday, January 11.
In the middle of the presentation, one legislator asked Powell about the report, which would initially get released in September 2021. The official pointed out that the delay happened because they did not get to where we needed to go.
However, the representative assured that the report would indeed get published soon, although, according to local media, his statement is very similar to those he has issued in other hearings and public speeches since the middle of last year.
The FED has been working on the matter of CBDC since 2019 when it became known that the institution would analyze the costs and benefits of an official digital dollar. Powell addressed a letter to two representatives, expressing his concern about the multiple implications that a general-use CBDC would entail.
A few months later, another spokesperson for the issuing entity confirmed that they would be leading some experiments with this technology.
In 2021, the Fed marked the digital dollar as a high-priority project. It is also vital to consider that China, one of the countries whose CBDC, the digital yuan, is more advanced, recognized in September 2020 its interest in using this type of technology to challenge the US dollar for its dominance in international trade operations.
Private Stablecoins will Run in Parallel with the Digital Dollar
During a hearing led on Tuesday, lawmakers also consulted the president of the US central bank on the relationship between stablecoins, cryptocurrencies with a value pegged to the dollar, and a digital currency issued by the Fed.
One of the senators proposed, fiercely empathizing on the feasibility of privately issued stablecoins under regulation, eventually circulating alongside the digital dollar. According to Powell’s point of view, it is perfectly feasible that both assets coexist.
This position distances Powell from the possibility that the FED will take a path similar to that of the People’s Bank of China, which banned any activity related to Bitcoin or other cryptocurrencies in its territory so it can pave the way for the digital yuan. However, other entities, such as the Treasury Department, are interested in applying strict controls on stablecoins.
Last November, the Treasury launched a report to Congress suggesting new mechanisms to regulate stablecoins, including transferring priority to banks to issue dollar-anchored tokens. However, an official of the FED expressed his disagreement with this type of measure since it would discourage competition, which favors efficiency and benefits users.
By: Jenson Nuñez
