report on digital dollar is ready

The president of the US Federal Reserve Bank (FED), Jerome Powell, said that the report on cryptocurrencies and central bank digital currencies (CBDC) is now ready, and will be published in the coming weeks. This was stated during a legislative hearing before US senators this Tuesday, January 11.

In the course of the presentation, one of the legislators asked Powell about the status of the report, which would initially be released in September 2021. The official pointed out that the delay is due to the fact that “we did not get to where we needed to go”. However, he assured that the report will indeed be published soon, although, according to local media, his statement is very similar to those he has issued in other hearings and public statements since the middle of last year.

The FED has been working on the issue of CBDC since 2019, when it became known that the institution would analyze the costs and benefits of an official digital dollar. CriptoNoticias reported at the time that Powell addressed a letter to two congressmen, where he expresses his concern about the multiple implications that a general-use CBDC would entail. A few months later, another spokesperson for the issuing body confirmed that they were conducting some experiments with this technology.

It wasn’t until early 2021 that the Fed decided to label the digital dollar a high-priority project.. It should be noted that China, one of the countries whose CBDC, the digital yuan, is more advanced, recognized in September 2020 its interest in using this technology to challenge the US dollar for its dominance in international trade operations.

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The release of the report on the digital dollar has been delayed several times, and Jerome Powell promised its early release in several statements last year. Source: Federalreserve / flickr.com

Private stablecoins will coexist with the digital dollar

During Tuesday’s hearing, lawmakers also consulted the president of the US central bank on the relationship between stablecoins, cryptocurrencies with a value pegged to the dollar, and a digital currency issued by the Fed.

One of the senators made the proposal, with emphasis on the feasibility of privately issued stablecoins under regulation eventually circulating alongside the digital dollar. In Powell’s view, it is perfectly feasible that they coexist.

This position distances him from the possibility that the FED will take a path similar to that of the People’s Bank of China, which prohibited any activity related to Bitcoin or other cryptocurrencies in its territory, to make way for the digital yuan. However, other institutions, such as the Treasury Department, are interested in strict controls on stablecoins.

Last November, the Treasury issued a report to Congress, recommending mechanisms to regulate stablecoins, including transferring priority to banks to issue dollar-anchored tokens. However, an official of the FED expressed his disagreement with this type of measures, since it would discourage competition, which favors efficiency and benefits users.

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