Per a press release issued by the U.S. Federal Reserve (FED), represented by its Chairman Jerome Powell, the institution will publish a “response” to the advances made in the crypto industry. The document claims that the global payments landscape has “driving rapid change”. Thus, the institution will explore mechanisms to “refine its role”. Powell said the following on the document:
Our forthcoming paper on the evolution of digital payments is intended—along with our other work as a supervisor, regulator, and payment system operator—to advance the objective of ensuring that the payments system and the economy work for all Americans.
Powell highlighted the potential that cryptocurrencies and digital assets have for improving the current financial system. Specifically, the government official referred to central bank digital currencies (CBDCs) as the main tool to benefit the general public. Powell added:
As the central bank of the United States, the Federal Reserve is charged with promoting monetary and financial stability and the safety and efficiency of the payment system. Pursuit of these core functions we have been carefully monitoring and adapting to the technological innovations now transforming the world of payments, finance, and banking.
In addition, the FED is to explore the “risk” that could emerge with CBDCs and digital assets as part of the financial system. The institution will evaluate the “effectiveness” of these assets to improve key aspects in the payment system: security, dynamic, and their capacities to aid in the domestic and corporate sector.
FED Powell And Its Position On Cryptocurrencies
The government of the United States has a troublesome history with cryptocurrencies. FED Powell seems to share this position. However, in the past months, the government official has been going back and forth on his stance.
Powell referred to Bitcoin as a payment tool for illicit transactions, a volatile asset, and was unconvinced about the role of a digital dollar in the U.S. economy. Two months ago, Powell seemed more convinced of the potential utility for CBDCs.
During The Committee on Payments and Market Infrastructures Conference held in Switzerland, he said that this asset could coexist with cash payments. Now, he said the following:
The design of a CBDC would raise important monetary policy, financial stability, consumer protection, legal, and privacy considerations and will require careful thought and analysis—including input from the public and elected officials.
Before making an official decision, the institution will open a public consultation to hear different sectors and their participants on the issue. Powell claimed that the U.S. and its Federal Reserve will begin a “thoughtful” process on cryptocurrencies and digital assets. The government official added:
(..) we expect to play a leading role in developing international standards for CBDCs, engaging actively with central banks in other jurisdictions as well as regulators and supervisors here in the United States throughout that process.
In the meantime, the crypto market fights to return to pre-crash levels. At the time of writing, some of the major cryptocurrencies show moderate profits in lower timeframes, but the price action is still choppy, and the bears could return for a second assault.