This Monday, United States Federal Reserve Chair Jerome Powell spoke at length on issues delaying the launch of a US Central Bank Digital Currency (CBDC).
The Fed Chair firstly notes the US already has a safe and dynamic domestic payment system. Therefor, there is no need for the nation to rush the process of digitizing the US dollar. Powell discloses that, prior to the US getting ready to launch a CBDC, certain issues have to be resolved.
Conversations and rumors regarding the potential launch of a US CBDC no doubt emanates from China. The world largest economy has continued to record progress in their quest for a digital Yuan. Currently, China’s digital Yuan is being tested across several provinces in the country. If all goes according to plan, a nationwide rollout will occur in the near future.
The world continues to adopt new technologies believed to be the future of money. It makes the digital Yuan a prospective currency to oust the traditional US dollar of its global dominance. Powell, however, said he won’t bow to pressure, even as other countries seemingly edge closer to launching a CBDC.
Factors US are considering before CBDC launch
Powell, on Monday, while speaking at a panel on cross-border payments hosted by the International Monetary Fund, said that the US has not finalized its decision to issue a CBDC.
The Fed Chair feels that a lot still has to be done before the US can launch a digital dollar. He disclosed that a digital dollar is not even a priority for him. That situation can always change, though.
“WE HAVE NOT MADE A DECISION TO ISSUE A CBDC, AND WE THINK THERE’S A GREAT DEAL OF WORK YET TO BE DONE. […] IN FACT, I ACTUALLY DO THINK THAT CBDC IS ONE OF THOSE ISSUES WHERE IT’S MORE IMPORTANT FOR THE UNITED STATES TO GET IT RIGHT THAN IT IS TO BE FIRST.”
Powell explains that “getting it right” is a two-fold approach. it is not just about the potential benefits of a CBDC, but also the potential risks. He noted that this latter aspect matters more because the US Dollar is the world’s reserve currency.
He concluded by saying that other countries have their individual motivations for issuing a CBDC. According to Powell, a CBDC should improve an already safe and active dynamic domestic payment system. That is the current main point of focus.
Do Americans want a CBDC?
The CBDC concept continues to become more popular globally. However, US citizens are skeptical about the idea of launching a digital dollar. A survey conducted by Genesis mining reveals that over 50 percent of Americans don’t want the Fed to introduce such assets.
Less than 25 percent agrees to the proposition that the government should abandon fiat currencies for a digital dollar.