U.S. Federal Reserve Chair Jerome Powell said he isn’t in a rush to adopt a central bank digital currency (CBDC) because of the risks such currencies pose to the status of the dollar, CoinDesk reported.
“We don’t feel an urge or need to be first,” he said of CBDCs, according to the report. “Effectively, we already have a first-mover advantage because [the U.S. dollar is] the reserve currency.”
Powell said it would likely be years rather than months before the Fed had any sort of CBDC ready. Despite that, there have been early studies of such payment methods at the central bank’s Boston location, CoinDesk reported.
According to Powell, the Fed is “investing heavily” in the technology and is looking into the policy questions posed by CBDCs. And he said the private sector’s ability to create private money like bitcoin or other cryptocurrencies that led the Fed to look into all of this in the first place, CoinDesk reported.
Powell said he wants to proceed with caution, explaining, “in the past when private sector money [is created], the public sometimes just thinks of it as money.” When the public finds out it isn’t money, that’s a “bad thing” the Fed wants to avoid.
Powell added that the Fed needs to focus on finding better regulatory answers, with global stablecoins poised to potentially become more significant in the future.
China and other countries have already begun work on CBDCs, with China having conducted several trials in the last few months, letting people who won a lottery have 200 digital yuan each to spend at various locations, PYMNTS reported. The Chinese efforts have slowly begun to involve the central bank controlling and tracking digital fiat, with its own direct issuance and existing card networks working together.
The report speculated that CBDCs could see major progress in 2021.