The Federal Reserve and the US Treasury will join forces to create a CBDC. With a digital dollar, the FED would respond to the excitement this move would provoke around bitcoin.
Jerome Powell, the Federal Reserve (FED) president, treats the digital dollar as a “high priority project.” Powell confirmed in a hearing before the Senate Banking Committee that there is a high chance for the United States to issue its central bank digital currency (CBDC). Several nations worldwide are also considering the same fact.
Powell believes that approval from the US Congress will be a requirement to develop a digital dollar. Although “it is unclear until we see in which direction we are going.” But Powell was convinced that 2021 would be a crucial year to move forward with this project.
The FED president also added that there are political and technical elements to solve before launching this nature project. He said: “A public dialogue is going to happen.” This dialogue intends to know the position that all the groups interested in the project could have.
Powell acknowledged that a digital dollar could contribute to greater financial inclusion. Still, his concern seems to revolve around the fact that today’s the United States has a functioning banking and monetary system and a strong capital market. He stated that the Fed must be careful by creating a digital dollar.
In October of 2020, the United States seemed quiet about issuing its digital version of the dollar. Powell pointed out that it was more relevant to focus on studying the risks better than to be the first to publish a CBDC. However, at that time, some said that “something” would end up replacing the US currency as a global store of value.
Most Americans Can’t Access Simple Payment Systems or even Bank Accounts
Jerome Powell’s firm position regarding the issuance of a digital dollar; his work relates with Janet Yellen, the Secretary of the treasury of the United States, who, on Monday, February 22, claimed to be in favor of keeping the research and the seeking of the possibility of a CBDC.
“It makes sense for central banks to look at it [CBDC],” he said, as reported by Forbes. “We have a financial inclusion problem. Too many Americans do not have access to simple payment systems or bank accounts, and I think a digital dollar could help. I think it could lead to faster, safer, and cheaper payments,” Yellen said.
Yellen also sends some suggestions about how the digital dollar could be appropriate for the FED to respond to the excitement that circles around bitcoin, both for its new historical price records and the announcements of large companies such as Tesla, Square, or Microstrategy of invest in cryptocurrency.
In any case, everything seems to show that a partnership between the Federal Reserve and the US Treasury could be happening to create a digital currency that the central bank could issue without obstacles.
By: Jenson Nuñez
