Private entities should not participate in creation of CBDC, says the Fed chairman

Key facts:

To Powell, the digital currencies could threaten the dollar.

The Fed chairman said that the institution is very close to the potential of the CBDC.

Jerome Powell, chairman of the U.s. Federal Reserve (Fed), considered to be the private sector should not be involved in the creation of the digital currencies of central banks (CBDC, according to its acronym in English). In fact, the representative of the Fed believes that if there is currently no private participation in the issuance of currency, it should not be different in the digital case.

During an appearance before representatives of the House Committee of Financial Services of the united States, Powell said Wednesday 17 June that the same population would not be consistent with private participation in a project of such importance. “I don’t think that the public would receive well the idea that private employees are to be responsible for something so important,” he said.

On the other hand, the Fed chairman said that the institution he heads follows with much attention the topic of digital currencies. Especially, recognizing the possible implications that this type of coins I could have on the global economy in the future.

“If this is going to be a good thing for the U.s. economy and for the dollar, then we have to be there,” argued the chairman of the Fed. For him, it would be regrettable to “wake up one day and see that the dollar is no longer the world’s reserve currency”. This would be a possibility if you disregard the topic, completed Powell about it.

Not only in the united States is discussed openly on this topic. Various countries have begun even to explore the creation of their own CBDCwith China as one of the most insistent, though no specific dates on the table, as has been reported Breaking News.

Control over the transactions or the risk of money laundering

Questioned on the control of the movements of funds that involve a comprehensive scan of the dollar, Powell said that “if you create a digital currency from the Central Bank, you can know every movement of every individual.” In this regard, he acknowledged that that is not good.

But the opposite case nor would it be desirable, in the opinion of the representative of the Reserve american. Mainly, he expressed his concern for the facilities to launder money if there is no follow-up to the movements. “We need to understand the implications of cybersecurity,” explained on this theme Powell.

The Fed chairman argued that still from the institution are continually evaluating the technological developments and their possible implications. But he did not speak about any concrete plan or dates to consider the creation of a CBDC.

In a survey of 66 central banks, the majority stated that they study the possibilities of developing their own CBDC. Source: BIS.

For the moment, a large part of the world has put its attention in this type of digital currencies. According to data from a survey carried out by the Bank of International settlements (BIS, according to its acronym in English), about 60% explores the impact of the stablecoinsor currencies anchored, among a total of 66 central banks consulted.

On the other hand, for the investment firm Grayscale, a hypothetical adoption forced the CBDC in favour of bitcoin and other cryptocurrencies decentralized. Mainly, the contrast with the control of a central entity would make that highlight the advantages of Bitcoin, described the firm in a research which was reviewed by Breaking News at the end of may.

Cryptocurrency Market