While there is nothing official yet, a US digital dollar has become a legitimate discussion in cryptocurrency, to supplement the money.
In a historic move, Federal Reserve Chairman Jerome Powell said on Monday that the Fed is open to collaboration with private companies in creating a U.S. digital dollar. Could this be an official cryptocurrency?
Not yet. While Powell was sure the United States government was not committed to launching a cryptocurrency, he took note of projects such as Facebook's Libra, which prompted banks to take a closer look at the digital currency space. The President of the Federal Reserve also pointed out that there are issues and issues related to monetary policy, including monetary policy limitations. He also mentioned that cybernetics and illegal activities should be a concern.
Powell said at an International Monetary Fund panel:
"We will have many conversations with industry and the involvement of the parties investigated, and this will help us in our work with international currencies and payments. In fact, I think this is one of the issues that is more important for the United States to get right than to be the first"
Real-time payments have been a problem for the Fed, as the U.S. is behind other countries in space. Mexico launched Cobro Digital, which allows users and merchants to make online transactions at digital weights last year, and China began testing a digital renminbi. The Bahamas is the last country to enter the digital fray, announcing on Tuesday that it would launch a national digital currency later this month.
While the Fed is not committing to a digital dollar at the moment, they are in full swing to bolster payments in real-time. The Fed expects to maintain its FedNow system to allow real-time payments 24 hours a day, no later than 2024. So far, the project still seems to be working on time, according to those who are involved.
Despite the Fed's neutral response, a U.S. digital dollar seems almost inevitable. Last January, a survey of 60 central banks conducted by the Bank of International Settlements found that 80% of central banks work in their own digital currencies. That said, only 10% of the banks surveyed believe they disclose a digital currency in the short term, and 20% say they plan to launch something in the medium term.
When an official US cryptocurrency will hit the market, no one knows, but don't play for those notes yet. As Powell emphasized in his statements, any digital dollar would serve as a complement to physical money, not a replacement.
Powell also said:
"Unlike some jurisdictions, here in the United States continues to see strong demand for money. We think it's important that any potential CBDC serve as a complement, not a substitute for, money and the private sector's current digital forms of the dollar, such as commercial bank money"