Federal Reserve Board ("FRB") Chair Jerome H. Powell described the potential for central bank digital currencies ("CBDCs") in the U.S. payment system.
In a video message, Mr. Powell stated that the FRB is considering whether and how a U.S. CBDC could improve the domestic payments system, stressing that CBDCs "could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar." Mr. Powell noted that, as part of the FRB's efforts over the past several years to study CBDCs, the FRB will begin broader consideration of the creation of a U.S. CBDC by issuing a discussion paper and requesting public comment on their benefits and risks.
Mr. Powell also highlighted that cryptocurrencies thus far have not served as a "convenient" form of payment because of their swings in value. He said that stablecoins might serve as such a payment, as they are tied to the value of the dollar. However, Mr. Powell stated that stablecoins do pose a risk, given that (i) such coins may not carry the same protections as more conventional means of payment, and (ii) the traditional regulatory framework does not oversee private-sector payments innovators.
Commentary
Primary Sources
- FRB Press Release: Federal Reserve Chair Jerome H. Powell outlines the Federal Reserve's response to technological advances driving rapid change in the global payments landscape
- FRB Statement, Jerome H. Powell: Transcript of Chair Powell's Message on Developments in the U.S. Payments System
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.