The American central bank sees no time pressure for the introduction of its own digital currency.
Jerome Powell, head of the US Federal Reserve, warns that stablecoins could become intrinsic to the system faster than expected. Nonetheless, or rather because of it, the “Fed” wants to focus on quality rather than speed in developing its own central bank digital currency (CBDC).
Stablecoins are cryptocurrencies that are linked to an external asset such as fiat currencies or gold, which gives them their eponymous (value) stability.
For this reason, they are particularly suitable as a means of payment
Central bank digital currencies ( CBDCs ) are the central banks‘ answer to the private-sector stablecoins, but although they are mostly also on a blockchain like these, they lack many of the characteristic features of cryptocurrencies. So CBDCs are not really decentralized and independent as they are under the control of the issuing central banks. In principle, this is a blockchain version of the respective national currency.
In an interview with Yahoo Finance, Powell explains that technological advances have now made it possible for private companies to create their own currencies. However, such private currencies would have proven problematic in the past:
“Technological advances make it possible for private companies to print their own digital currency. In the past we have seen that the population sees these digital currencies as normal money, but at some point it becomes clear that this is not normal money. This is not a good thing, which is why we have to avoid such a scenario. “
Powell states that he could imagine that stablecoins will play a major role faster than expected and will become downright „systemic“
However, he admits that the US Federal Reserve does not yet have a precise plan of how it would act in such a situation, as it is only beginning to understand the risks involved:
“Stablecoins could become inherent in the system from now on, although we are still far from being able to cushion the resulting risks. The people expect us to be able to do this, and they have a right to expect that too. […] Accordingly, this is our top priority. “
But even this urgency does not prompt the “Fed” to take a quick shot, although Russia , China, Sweden, Australia and the European Central Bank (ECB) are already researching and working on corresponding digital currencies . The Chinese central bank in particular is making great strides in this regard , but Powell is unimpressed, because the USA would have a decisive advantage anyway thanks to its status as the global reserve currency:
“Since we are the global reserve currency, we feel obliged to do this right. We are under no pressure to be the first. Because we are the global reserve currency, we have a first mover advantage anyway. “
However, not all observers share Powell’s confidence. A former Japanese finance minister warned in October that the Chinese digital currency could gain a decisive lead if the digital yuan was launched first.
However, the president of the Chinese Financial Association rejects these fears, as the digital yuan is not designed in the same way as the planned Facebook stablecoin Libra. Accordingly, China has no interest in replacing other national currencies.