Federal Reserve Chairman Jerome Powell said at the Bank for International Settlements (BIS) conference on Monday that the launch of digital currencies is an important step for the financial system and requires careful preparation, and there is no rush to launch at this Time.
In his speech, Powell said.
For the digital dollar, we have an obligation to be at the forefront of understanding the technical challenges involved, as well as the potential costs and benefits.
In addition Powell also said that because of the key role of the dollar as the world’s reserve currency, it is far more important for the Fed to get the digital dollar right than to act quickly, so there is no need to grab the top spot in terms of the digital dollar, and he believes the real key is whether the public wants, or needs, a new digital form of central bank currency.
As for the private cryptocurrencies represented by Bitcoin, Powell believes they are more suitable for speculation and are not capable of serving as a substitute for the dollar.
Unlike the current U.S. dollar, which is backed by the value of the Federal Reserve, private cryptocurrencies are not really useful as value symbols and have no value behind them, but are more of a speculative asset and are essentially a substitute for Gold rather than the U.S. dollar, so they are not frequently used in transactions.
As for the legal issues that digital currencies may face, Powell said they need to be supported by Congress, the government and the public at large, and in particular, they need to be given the go-ahead by Congress. He believes that laws related to digital currencies are best to appear as enabling laws, rather than interpretations of existing laws.
The BIS governor, who also attended the meeting that day, was also the governor of the German central bank, Jens Weidmann, who also expressed similar views to Powell. He believes that while both the Fed and the ECB are studying digital currencies, any possible introduction will take several years, and that digital dollars will require consultation with lawmakers and possibly legislation.
On the day of Powell’s speech, bitcoin was quoted on Coinbase down but still holding near $57,000. And within the last seven months, the cryptocurrency’s price has soared amid a surge in trading activity and increased acceptance by the financial industry.