US Federal Reserve assessing central bank digital currency

Yesterday, the head of the US Federal Reserve Jerome Powell responded to a letter from two Congressmen on central bank digital currencies (CBDCs). He confirmed that the Reserve has analyzed whether a digital currency makes sense for the US and that it has been considering several options.

Fed continues to explore CBDC benefits

In September, French Hill and Bill Foster penned a letter asking the central bank whether it has explored the possibility of a CBDC, and, if it hadn’t, urging it to consider doing so. Now, the Congressmen have received a response. It turns out that the Federal Reserve has indeed “assessed and [continues] to carefully analyze the costs and benefits of pursuing such an initiative in the US.” It is currently exploring whether a digital currency would “lead to safer, less expensive, faster, or otherwise more efficient payments.” But for the US, the Reserve has yet to find a compelling case for a CBDC.

Why is now not the time?

Like European Central Bank (ECB) official Dirk Bullman stated last week, Powell wrote that the US has a competitive payments market with fast and cheap services, particularly in comparison to other nations exploring a CBDC. Also as in Europe, there remains a high usage of cash and hence little current demand for a digital alternative.

Article continues …

---