Federal Reserve Open to Private Sector Collab in Possible Digital Dollar

Marco Green
October 19, 2020

Federal Reserve Chairman Jerome Powell said Monday that the Fed is open to collaborating with the private sector on a possible digital US dollar, but reiterated that the central bank has not committed to actually launching one.

Speaking on the potential of CBDC, the head of the US FED, Jerome Powell, explained, that the state-issued digital currency will supplement, but not replace the existing fiat currency system.

"In addition to assessing the benefits - and there may well be benefits - there are also some quite hard policy and operational questions that need to be thoroughly evaluated", Powell said.

"This 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 said during a panel discussion at the International Monetary Fund annual meeting on central bank digital currencies (CBDC).

Along with that, Powell said the digital dollar is not a replacement to the actual dollar, only a "compliment".

Commenting on the risks related to the digital assets, Jerome Powell pointed to the cybersecurity threats, risks to monetary policy and financial stability, and the risks of financing illicit activity.

There is growing interest among the world's central banks in issuing official digital currencies, driven partially by concerns a private actor - such as Facebook's Libra project - might get there first, without controls on how it is designed or used. "Complementary efforts are also now underway, for example through the Federal Reserve Bank of Boston, which, in collaboration with researchers at MIT (Massachusetts Institute of Technology), is developing a hypothetical central bank digital currency".

"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."

Other reports by Click Lancashire

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