The United States would develop a digital dollar but is in no hurry to enter the race. The executive distances himself from the term cryptocurrencies and prefers to call them crypto assets.
US Federal Reserve (Fed) Chairman Jerome Powell recently stated that Bitcoin (BTC) is essentially a substitute for gold rather than the US dollar. He said that stablecoins have an “improvement” as national fiat currencies like the US dollar back them, theoretically giving them “credibility.”
The executive questioned cryptocurrencies again, stating that they are very volatile, that nothing backs them, and that they incentivize energy consumption. He said that his administration prefers to call them “crypto- assets” rather than cryptocurrencies.
“Crypto assets are very volatile. See Bitcoin[, for example]. Therefore, they are not really useful as a store of value. They are rather an asset for speculation,” Powell commented. The official spoke of a day when Bitcoin was still trading around USD 57,000 per unit. However, its price has skyrocketed over the past seven months.
Powell complimented stablecoins, but he addressed a clear and strong message to the organizations issuing and supporting them. The head of the US central bank said that they could play a role in economies with adequate regulations. However, he asserted that “the role will not be that of forming the basis of a new global monetary system.”
The Fed Chairman said that private companies behind cryptocurrency projects with a global reach will deserve and receive the highest level of regulation. In other words, projects like Tether (USDT), USDC, and BUSD, among others, could receive more scrutiny in the future.
Working on the Digital Dollar, but Not in a Hurry
Jerome Powell emphasized that the United States is not in the race to develop a digital dollar but has been conducting evaluations. Given that the US dollar is the world’s main reserve currency; they have decided to do so. However, he said that the country has no reason to rush in this regard.
The official noted that the proposal of a fully digitized dollar is a project that the Fed would not lead alone. He explained that Congress would have to pass new enabling legislation and the White House would have to give its approval.
Powell also distanced the United States from the trend of testing its digital currencies, which many countries have already done. China is the most prominent case, but other countries such as Ukraine and the Bahamas have projects of this type in progress.
His position on the creation of a digital dollar greatly contrasts with what he said in February. During a hearing in the banking committee of the US Senate, he stated that such digitization should be a “high priority” project.
Last year, Powell said that his country had better develop a good project, rather than the first. The reason for that is that it would not be possible to dismantle a national service of this kind.
By Alexander Salazar
