Breaking: CBDC may supplement the existing monetary system - Jerome Powell
|Speaking on the potential of CBDC, the head of the US FED, Jerome Powell, explained, that the state-issued digital currency will supplement, but not replace the existing fiat currency system.
FED's Governor emphasized that the US has a stable and mature financial system with a significant share of the population having access to the banking services, making the state-backed cryptocurrency a supplementary solution for the existing system.
Powell also said that the US is not interested in moving fast and becoming the first country to launch its CBDC.
It is more important to do it right than to do it first, - he said.
Commenting on the risks related to the digital assets, Jerome Powell pointed to the cybersecurity threats, risks to monetary policy and financial stability, and the risks of financing illicit activity. He said that the central bank might be ready to assess the potential benefits of CBDC only after the above-said issues are resolved.
Collaboration and research are the key
Speaking on the innovations fostered by the private sector, the head of the US central bank explained that the FED is always focused on collaboration with both the private sector and other regulators.
When it comes to innovation, the FED strives to develop cooperation and consult with the industry participants and all involved parties to achieve the goals of monetary and financial stability.
Particularly, Powell said that the central bank does a lot of research and experiments to stay ahead of things. Notably, Boston's FED is experimenting with hypothetical CBDC.
Who is under control
Apart from that, the panelists of the discussion hosted by the IMF focus on the question, who will control money in the future. Many regulators have been accelerating the introduction of their CBDC out of fear to lose control over payment systems to privately issued currencies such as Libra.
They also mentioned that the economic and policy consequences of CBDCs and privately-issued stablecoins would depend on mass adoption, which is hard to predict.
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