Fed Chairman Powell on CBDC: “It’s Better To Get It Right Than Be First”

Share Article
In Brief
  • U.S. Fed Chairman Jerome Powell made numerous statements during an IMF seminar on cross-border payments.

  • According to Powell, for the U.S. it's better to get things right than to be first.

  • Powell also says that the Fed is currently undergoing extensive research and development efforts to stay ahead of the issue of CBDC.

  • promo

    Want to know more? Join our Telegram Group and get trading signals, a free trading course and daily communication with crypto fans!

The Trust Project is an international consortium of news organizations building standards of transparency.

U.S. Federal Reserve Chairman Jerome Powell spoke Monday as part of a panel on cross-border payments and digital currencies at an International Monetary Fund (IMF) virtual seminar.



The seminar focused on the benefits and risks of digital currencies as well as their policy implications. This isn’t the first time Powell has discussed digital currencies.

Earlier this year, he labeled Facebook’s Libra project a “wake-up call.” He also stated that whether a digital currency helps the U.S. to preserve the centrality of a trusted and accepted currency is “an open question.”

Source: IMF

On Monday, in a highly anticipated webcast, Powell offered more clarity on the U.S. Government’s digital currency position. When queried on the potential role of a CBDC for domestic and international cross-border payments, Powell was measured in his comments.

He acknowledged the potential of CBDCs for improving the payment systems and that the U.S. is committed to “carefully and thoughtfully” exploring them.



Powell pointed out that in the U.S., many factors reduce the imperative for a quick CBDC launch,

“we have a strong demand for cash, mature and well-regulated banking sector, and most people already have access to the electronic payments system.”

Regardless of timing, Powell also emphasized that if any digital dollar were to be issued, it would be viewed as a “complement,” not a replacement for cash.

 

The First Mover Advantage

On the issue of whether or not there is a first-mover advantage for CBDCs, Powell offered the perspective that “it’s more important to get it right than to be first.”

According to Powell, getting it right means focusing on potential risks and the tradeoffs that need to be thought out carefully,

“we have a responsibility to the U.S. and to the world that any steps with a digital currency be taken safely.”

In outlining some of the key issues that would need to get dealt with for a safe CBDC launch, he mentioned three problem areas:

  • Ensure protection of the CBDC from cyber attacks, counterfeiting, and fraud.
  • Consideration of how a CBDC could affect policy and monetary stability.
  • Determining how to fight illicit activity while preserving CBDC user privacy.

Staying Ahead of the CBDC Curve

In conclusion, the Fed chairman touched on how the U.S. plans to remain on the front of CBDC developments.

According to Powell, the Fed is collaborating with the private sector, taking a multidisciplinary approach, harnessing the power of the Federal Reserve System, surveying design options, and actively engaging in a series of experiments and research projects. “We can be, and we must be at the forefront of research.”

The panel also featured Agustín Carstens, general manager of the Bank for International Settlements; Nor Shamsiah, Governor of Bank Negara Malaysia; and Governor of the Saudi Arabian Monetary Authority Ahmed Alkholifey. The panel was moderated by Kristalina Georgieva, the Managing Director of the IMF.

Share Article

Colin is a writer, researcher, and content marketer with a keen interest in the future of money. His writing has been featured in numerous cryptocurrency publications, and his holdings don't amount to more than a handful of BAT.

Follow Author

Daily signals, Bitcoin analytics and traders chat. Join our Telegram today!

Let’s Go
Daily signals and Bitcoin analytics.