During a virtual event, the U.S. Fed Chairman, Jerome Powell, spoke on why the country’s central bank had no reason to rush for adopting central bank digital currencies (CBDC). Powell adds that the U.S. central bank is looking to implement a CBDC efficiently rather than quickly. He admitted that one of the major reasons for the Fed to get into central bank digital currencies is the ability of private firms to create their own digital assets or cryptocurrencies.
Jerome Powell Believes No Rush to Adopt CBDCs
Jerome Powell spoke at an online event hosted by the Princeton University in New Jersey, saying that the Fed has heavily invested in the financial technology and are currently understanding the policy concerns it could create, saying:
“We don’t feel an urge or need to be the first. The launch will take years rather than months.”
Even though Powell is fully aware of the potential benefits of CBDCs, he have stressed that the potential risks need to be addressed first:
“This topic will continue to be a high-level focus because they (CBDCs) could become systemically important overnight and we don’t begin to have, you know, our arms around the potential risks and how to manage those risks and the public will expect we do and has every right to expect that.”
Central Banks Globally Gearing Up for CBDC
Powell’s comments came after central banks around the world are speeding up their process in launching their own CBDCs. For instance, the European Central Bank (ECB) has even released guidelines on launching its digital euro. Russia and Japan have also released progress around CDBCs.
China too has made significant progress by handing out the digital yuan to its residents in its nationwide trialing. The country conducted several trials in the last few months. In fact, its residents even won a lottery of 200 digital yuan to be spent at various locations.