Members of a panel discussion held by the United States Federal Reserve (Fed) have said that the scope of cross-border use of central bank digital currencies (CBDCs) is currently quite limited.
The gist of the remarks was that CBDCs, as they currently stand, would not have a marked impact on the world.
One panel session was dedicated towards addressing issues related to digital assets. The panelists spoke on topics related to the technologies behind cryptocurrencies, and CBDCs were one of them.
The panel members said that the scope of cross-border applications of the CBDC was still quite limited. The official notes from the conference reads:
“Panelists generally agreed that technology by itself would not lead to drastic changes in the global currency ecosystem, as other factors such as the rule of law, stability, network effects, and the depth of markets are crucial for the advantages held by dominant currencies.”
It says that the crypto market is more focused on retail investors entering with a speculative frame of mind, also acknowledging that institutional investors are limited because of a lack of regulatory frameworks.
But in what could offer some minor hope for the crypto market, the panelists agreed that digital assets could actually reinforce the dollar’s strength “over the medium run if new sets of services structured around these assets are linked to the dollar.”
U.S. Fed definitely considering CBDC
There has been a lot of speculation over the years on whether the Federal Reserve would launch a CBDC. After many years of keeping silent while other countries announced initiatives, the Fed finally confirmed it was considering a digital version of the dollar in April.
No time frame on the launch of the CBDC has been published, and with the recent remarks at the conference, it may be some time before the country is ready. There has been some support internally for a CBDC, with Vice-Chair Lael Brainard saying that CBDCs and stablecoins can co-exist.
Meanwhile, the U.S. has been facing high inflation rates. The Fed has raised interest rates by 0.5%, the largest margin since 2000. The monetary policies of the agency have led to some market analysts saying that it has a strong influence on crypto and its market cycles.
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