- 23 December 2022
- Posted by: Cryptovalues
- Category: Cryptovalues News, World News
In April 2022, the U.S. Federal Reserve officially stated that it was studying a central bank digital currency.
Some time ago, Fed Chairman Jerome Powell agreed that “a U.S. CBDC could potentially help maintain the international standing of the dollar.” When asked in a recent interview about a digital currency, Powell said:
“We wouldn’t want a world where the government sees in real time every money transfer that anyone makes with the CBDC. That would not be an attractive thing in the American context.”
Republicans on the House Financial Services Committee, wrote to Federal Reserve Board Vice Chair Lael Brainard to clarify the position of the central bank’s digital currency regulator (CBDC) after the latter’s statements.
Following the approaching expiration of President Biden’s executive order to ensure responsible development of digital assets centered on a U.S. CBDC, the statement says, “Committee members have raised concerns about the Fed’s current authority under the Federal Reserve Act to issue a CBDC.”
And in that sense, the letter follows Brainard’s testimony before a House of Representatives committee in May, where she said:
“The recent turmoil in the cryptocurrency financial markets makes it clear that the actions we take now-be it the regulatory framework or a digital dollar-should be robust to the future evolution of the financial system.”
About stablecoins Brainard criticized the idea that stablecoins do not have the same protections as commercial bank currency, as having these kinds of protections “could reintroduce significant counterparty risk into the payments system.”
Speaking of potential risk mitigation, Brainard says that the U.S. CBDC could also be
“a potential way to ensure that people around the world who use dollars can continue to rely on the strength and security of the U.S. currency to transact and conduct business in the digital financial system.”
According to Committee members, on the other hand, the arguments made by the Fed member create legitimate doubts in that it might appear that the Fed’s goal with a CBDC is to restrict the use of digital assets and other innovative payment methods in the private sector.
Legitimate and typical doubt after what occurred in China with the ban on the crypto sector and the establishment of the digital yuan.
Developments are awaited to understand where the truth lies.