US Fed Weighs Up Potential CBDC as Countermove Against China
Nikolai Kuznetsov's original article for cointelegraph.com reduced by 76%
Markets have heard more frequent guidance from the Fed on cryptocurrencies in recent years, and thanks to two curious U.S. representatives - French Hill and Bill Foster - this guidance now includes an enlightening response from Fed Chairman Jay Powell to their letter on a central bank digital currency, or CBDC.Evolving trends force regulators' handsThe infiltration of blockchain into our global financial sector is nothing new, but a few trends have seen these experimental decentralized solutions tackled head-on by authorities. The Powell letter is revealingCompelled by concerned lawmakers to indicate which way the Fed is leaning when it comes to its own stablecoin, Powell underlined that the agency currently has no plans to develop a central bank digital currency.
"If the US were to issue a digital dollar, it would certainly have far-reaching impacts on the global markets." "The issuance of a digital dollar by the government would actually prompt the growth of both ecosystems and spur other participants to be more innovative and compliant with a global standard. Competition brings out excellence. Whoever executes it properly, would ultimately earn the same type of digital faith and volume that exists for the US dollar in its fiat form." Governments must be conscientious custodiansA big issue with a potential government-backed stablecoin is that if the Fed were to impose rules that infringed upon blockchain's basest advantages, people may be more willing and able to put their money into decentralized blockchains instead.A question would then be if the government could somehow shut those blockchains down for being a digital equivalent or a counterfeit.
The coming years will see central banks around the world make moves toward digital currency in close succession - if not for the immense opportunities the system provides, then simply because China and Libra have changed the aging perception that it cannot be attempted. Mark Zuckerberg argued in his hearing before Congress that any hesitation would result in China beating them to the punch with a digital yuan - and in no time, he was proven right.
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