Fed Chairman Promises Crypto, CBDC Report “Soon”

Federal Reserve Chairman Jerome Powell has said the long-awaited digital currency report will be released “in the coming weeks.”

Again.

It’s a promise Powell has already made. Due to be released last summer, Powell said on September 22 that the report – which is expected to deepen the Fed’s thinking on central bank digital currencies, or CBDCs – would come out “soon.”

On November 30, he said the Fed delayed the report because it was “trying to get it right” but promised it would be released in “the coming weeks.”

Speaking at the Senate confirmation hearing for his reappointment today, Powell said that “the report is really ready for release, and I would expect us to drop it – hate to say it again. – in the coming weeks”.

Then he said, “We haven’t quite got it where we need to get it, but it is there now.”

It sounds a lot like “trying to do it right”.

Nonetheless, he reiterated, “In a few weeks we will release it. “

So, maybe don’t hold your breath for where the Fed is tackling the creation of a digital dollar.

In fact, don’t really hold your breath.

Powell’s next sentence was: “And by the way, this will be more of an exercise of asking questions and soliciting public input rather than taking a lot of positions on various issues, although we take certain positions. “

CBDC You later

The United States has fallen behind other major economies in turning to a digital dollar. The most advanced is China, which is set to launch its heavily tested digital yuan ahead of the start of the Beijing Winter Olympics on Feb.4. India is also pursuing one, and the EU, while not engaged, has done a lot of high-level testing and research.

A year ago, Powell called the digital dollar project a “high priority” which the Fed is examining “very carefully” in its biannual report to the Senate Banking Committee on February 24. “It is much more important to do it right than to do it quickly or feel that we have to rush to draw conclusions because other countries are advancing”, Powell said in his report.

The next day, he told the House Financial Services Committee that 2021 “will be the year when we engage quite actively with the public.”

Which, again, sounds a lot like what he said today.

At the end of the year, Powell seemed rather well placed against an American CBDC, saying that “it is not yet clear what additional value a general-purpose CBDC could bring to the United States.”

While admitting that a CBDC could lead to “safer, cheaper, faster, or otherwise more efficient payments,” Powell said in November that it just wasn’t necessary.

“The payments landscape in the United States is very innovative and competitive, with many fast and reliable digital options available to consumers,” he said, adding that the issues solved by CBDCs apply more to countries. developing countries with a slow and unreliable payment infrastructure and a large unbanked population.

Hostility Stablecoin

The Fed’s report is also expected to look at stablecoins, which have been the root of much political drama and wrangling in recent times, with Senator Elizabeth Warren, D-Mass. Speaking in favor of ‘an outright ban at a Senate Senate committee hearing in December on the subject.

See more : Senator Warren Calls DeFi “Most Dangerous” Part of Crypto During Senate Hearing

While there has been growing support for stablecoins – cryptocurrencies backed one by one by dollars to maintain an even peg – particularly across the aisle, Powell was cautiously positive.

At a December 15 press conference, Powell said that “Stable coins can certainly be a useful and effective part of the financial system serving consumers if properly regulated,” Powell said. “At the moment, they are not. “

Referring to Facebook’s Libra / Diem stablecoin proposal, Powell said he was concerned about scaling his association with a major tech network as it could create “a payments network that was immediately systemically important and lacked appropriate regulations and protections.

In July, he acknowledged that one of the advantages of a US CBDC is that with a digital dollar “you wouldn’t need Stablecoins”.

On the other hand, on Tuesday, Jan. 11, Senator Pat Toomey, R-Penn., Asked Powell if there was anything “that should prevent well regulated, privately issued stablecoins from coexisting with a central bank digital dollar. ? “

Powell replied no.

Down the road

Overall, reading the (admittedly vague) tea leaves of Powell’s comments today, it looks like the Fed is going to kick the box further. After holding back the CBDC discussion for a year, Powell can still open it up for public debate, which could easily take another year.

If you think about it, it boils down to a pretty clear “not yet”.

And this is something Powell said in April: “It’s much more important to do it right than to do it quickly or to think that we have to rush to draw conclusions because other countries are moving forward. “