Federal Reserve Chair Jerome Powell outlined four qualities a hypothetical digital currency in the U.S. must have while adding that no final decision has been made on whether to proceed with creating one.
Powell said a central bank digital currency (CBDC) would need to ensure user privacy; it would need to be "identity verifiable," similar to the way U.S. bank accounts are identifiable to prevent money laundering; it would need to be "intermediated," or widely embraced by the current banking system; and it would need to be able to serve as a widely accepted means of payment.
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Powell made the comments Wednesday during a virtual panel at the Bank for International Settlements (BIS) Innovation Summit.
The Fed chair warned that crypto assets "have been used to facilitate illicit activity," and this needs to be prevented. He said some cryptocurrencies also present financial stability concerns.
U.S. central bankers are conducting research and experiments with digital currencies, though Powell has stopped short of recommending a digital dollar, saying such a move would need more input from U.S. lawmakers and stakeholders.
Fed officials are currently gathering feedback on a whitepaper on the topic that they published in January, which discussed the risks and benefits of the Fed introducing a central bank digital currency, without endorsing one.
See also:
- Biden Signs Crypto Executive Order
- Bold Caribbean Experiment in Digital Currencies Hits a Serious Snag
- BofA Sees Digital Dollar as Inevitable
- Leap Toward the Digital Dollar
- Will the Fed Issue a Digital Currency?
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