US in no hurry to develop digital dollar: Fed's Powell

Federal Reserve Chair Jerome Powell said the US central bank has a responsibility to be cautious before issuing an official digi
Federal Reserve Chair Jerome Powell said the US central bank has a responsibility to be cautious before issuing an official digital currency

The US central bank is researching a possible cyber-dollar, but will move slowly to ensure it first addresses the risks of fraud and counterfeiting, Federal Reserve Chair Jerome Powell said Monday.

"This is one of those issues where it's more important for the United States to get it right than it is to be first," Powell said during a at the IMF on central bank digital currencies (CBDC).

"And getting it right means that we not only look at the potential benefits of a CBDC, but also the potential risks," such as and counterfeiting, he said.

There is growing interest among the world's central banks in issuing official digital currencies, driven partially by concerns a private actor—such as Facebook's Libra project—might get there first, without controls on how it is designed or used.

But Powell said the Fed has a special need to be cautious since the US dollar is a global reserve currency, used by companies and worldwide.

"We have a responsibility both to the US and to the world that any steps taken for a US digital currency be taken safely."

"We're absolutely committed to the soundness of the dollar into safe and efficient US dollar payment systems," he said, but that relies on the "reliable rule of law, strong and transparent institutions, deep financial markets and an open capital account."

The Boston Federal Reserve Bank is working with researchers at the prestigious Massachusetts Institute of Technology to develop a "hypothetical central bank digital currency" to help assess potential security risks, he said.


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Citation: US in no hurry to develop digital dollar: Fed's Powell (2020, October 19) retrieved 24 November 2020 from https://techxplore.com/news/2020-10-digital-dollar-fed-powell.html
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