“If you were a US digital currency, you wouldn’t need cryptocurrency,”says Fed Chairman Jerome Powell.

Federal Reserve Chairman Jerome Powell thinks there is no need for cryptocurrency if there is a digital dollar. “I think that’s one of the strongest arguments in his favor,” he said. The Fed Chairman also insists the US is not threatening to lose the status of its reserve currency.

Fed Chairman Powell thinks cryptocurrencies are not necessary if there is a digital dollar
Federal Reserve Chairman Jerome Powell spoke about cryptocurrencies, stable currencies and the digital dollar during a congressional session of the U.S. House of Representatives Financial Services Committee on Wednesday.

At the hearing, Massachusetts Rep. Stephen Lynch said the Fed’s “swift action” on the digital currency would “calm” markets and asked whether the digital dollar would be a more viable alternative than the emergence of thousands of cryptocurrencies or stable coins in the payment system.

“I think it could happen. I think that’s one of the arguments presented in favour of digital currency, ” Powell replied.:

In particular, you wouldn’t need stable coins, you wouldn’t need cryptocurrency if you were a US digital currency. I think that’s one of the strongest arguments in his favor.

Answering another question, Powell noted that stable coins are very similar to money market funds or bank deposits, but there is no regulation.He said: “We have a tradition in this country where public money is kept in a place that is considered a very safe asset. We have a pretty strong regulatory framework for bank deposits or money market funds, for example. It’s not really available for stable coins.”

Spokesman Lynch was also concerned about the “slowness” of the digital dollar’s development, noting that many central banks around the world are developing faster in this area than the US.

“I think this is the beginning of an accelerating decision-making process,” Powell said. We have a lot of work to do, both technically and politically, but that’s the most important part of it.

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