Federal Reserve Chairman Jerome Powell mentioned that there are several unresolved issues surrounding central bank digital currencies (CBDCs), and the bank is taking its time before launch. Powell added that the Federal Reserve has no urgency regarding the launch of a CBDC.
During a virtual event, the Fed chairman said that the central bank is determined to launch a CBDC efficiently rather than quickly.
“We don't feel the urge or the need to be first. The launch will take years instead of months, "he added.
Powell also mentioned the potential benefits of digital currency from a central bank and outlined the large investments the Fed has already made in researching blockchain technology and the policy issues around CBDCs.
“We know that in the past, when private sector money was created, the public sometimes considered it simply money. At some point, they find out that it is not money and that is a really bad thing to avoid. The Fed will focus on better regulatory responses for global stablecoins. We believe there are potential costs and unresolved questions surrounding CBDCs, ”Powell said during an online event.
The recent comments from the Fed chairman came after central banks around the world accelerated their efforts to launch CBDC. The European Central Bank (ECB) recently released guidelines on the plan around a digital euro. China has already made significant progress over the digital yuan. Russia and Japan also released progress on the CDBC. Global central banks are drafting regulatory frameworks for cryptocurrencies, but most of them fully support CBDCs. Additionally, Powell accepted that CBDCs have potential benefits, but potential risks must be addressed first.
“This topic will continue to be a high-level focus because they (CBDC) could become systemically important overnight and we don't start to have, you know, our arms around potential risks and how to handle those risks and the public will. He will expect us to do it and he has every right to expect that, ”Powell said.