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Fed Powell “legally undecided” on central bank digital currencies

Federal Reserve Board Chairman Jerome Powell of the Senate Banking, Housing and Urban Affairs Committee on the “Semi-Annual Monetary Policy Report to Parliament” held at Capitol Hill, Washington, USA on July 15, 2021. I took a seat to testify at the hearing.

July 15 (Reuters)-Federal Reserve Board Chair Jerome Powell was undecided on the pros and cons of the Central Bank’s digital currency on Thursday, but Congress before taking action to create it. He said he was seeking approval from.

Powell said in a hearing at the Senate Banking Commission that he was asked to clarify his position on what has emerged as a thorny issue for the U.S. central bank: “Whether profits outweigh costs or vice versa. Has not been legally determined. “

If the Federal Reserve issues its own digital currency, widely known by the acronym CBDC, “We want a very wide range of support in society and parliament, and ideally we have very ambiguous legislation. Instead of reading carefully, it will take the form of approving the legislation, “he said.

Powell’s statement that Bitcoin and other cryptocurrencies “completely failed” to become a common payment method also supported the launch of a federal-backed CBDC by some observers. The purpose was to clarify the comment the day before I read that it was, and I am currently investigating.

Powell said in a testimony related to the House Financial Services Commission on Wednesday that one of the stronger debates for the Fed to set up digital currencies is the need for private alternatives such as cryptocurrencies and stablecoin. Said it could weaken. read more

But in response to a question from Pennsylvania Senator Patrick Toomy, he asked if the federal CBDC was a more viable alternative to whether it showed a change in his tone regarding the development of the federal CBDC. Having multiple cryptocurrencies or stablecoins that said they were only answering legislators’ questions about whether or not appears in the payment system.

Powell’s remarks on this issue reflect the anxiety and ambiguity of Fed officials regarding the development of a digital version of the dollar, despite many other central banks promoting their own CBDC. Recently, many Fed officials have openly questioned the need, and Powell isn’t eager for the Fed to introduce the CBDC first, even if it does. He reiterates that he wants to do it right.

In addition, in Thursday’s testimony Powell sharpened his criticism of cryptocurrencies like Bitcoin as a common payment method, but Stablecoin, which seeks to lock its value to the dollar, is a separate regulation. He said he would raise the above issue.

“Cryptocurrencies weren’t aimed at a payment mechanism, of course, except for those who wanted to remain anonymous for some reason, they couldn’t be completely one,” he said in the Wyoming Senate. I told Senator Cynthia Lummis.

“The real problem is stablecoin. My point about stablecoin is like a money fund, like a bank deposit, growing incredibly fast, but appropriate There is no such regulation, “says Powell. “And if you’re going to get something that looks like a money market fund or bank deposit … we should really have the right regulations, but today it’s not.”

The Federal Reserve Board will explore the world of digital payments extensively in a discussion paper that Powell said could be released in early September. Powell explained to the House of Representatives as an important step in accelerating efforts by the Federal Reserve Board to decide whether to issue a CBDC.

Report by Anne Safir and Dan Burns Edited by Chizu Nomiyama

Our criteria: Thomson Reuters Trust Principles.

Fed Powell “legally undecided” on central bank digital currencies

Source link Fed Powell “legally undecided” on central bank digital currencies

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