- The US Federal Reserve is in the early stages of a possible CBDC.
- The European Central Bank looks to move ahead with its CBDC implementation.
Both the US Federal Reserve and the European Central Bank released updates regarding their Central Bank Digital Currency (CBDC) implementation. While the US Fed revealed that they are in the early stages of a possible CBDC implementation, the ECB potentially revealed that they are finally ready to move forward with the project.
US Federal Reserve update
Randal Quarles, the Vice Chair for Supervision at the Fed, revealed that its stance on CBDC implementation is still in the early stages. During this Thursday’s House Financial Services Committee hearing, Rep. French Hill (R-AK) questioned Quarles on how the Fed's attitude has changed in recent months.
Quarles responded by stating that the Fed has long been interested in the prospect. Plus, the recent rise in government-backed payment systems worldwide has caused the Fed to look even closer at a possible implementation. Quarles said:
I still think it would be premature to say that we believe that this is a solution that the United States would need to implement. We're weighing pros and cons, there are pilot projects in place. This is still in the early stages. I wouldn't say we've changed our stance and believe that this is something the U.S. needs.
Fed chair Jerome Powell, on the other hand, has emphasized caution over speed. He believes that it’s critical to “get it right, as opposed to being first.” He also stated that the bank needs to make sure that the bank doesn’t pre-empt cash or private digital currencies.
ECB update
European Central Bank President Christine Lagarde hinted that they could be creating a CBDC within a few years and it will have a significant impact on the euro zone’s financial sector.
During this Thursday’s virtual panel discussion, Lagarde said:
My hunch is that it [CBDC] will come. If it’s cheaper, faster, more secure for the users then we should explore it. If it’s going to contribute to a better monetary sovereignty, a better autonomy for the euro area, I think we should explore it.
Lagarde believes that it will take at least two or four years before the project can be launched. Regardless, the ECB took a significant step last month by launching a public consultation public consultations on the digital euro and experimenting with the new type of money. The final decision for full implementation will be made by the middle of 2021. Quite like Powell, Lagarde has also emphasized caution over speed.
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