Federal Reserve Chairman Jerome Powell has confirmed that the potential “digital dollar” will not eliminate the need for cash in the US
Fed Chairman Jerome Powell made it clear yesterday that if the new digital currency is successfully developed and implemented, it must coexist with physical money. He stated that the central bank’s introduction of a digital currency would not mean the extinction of physical money, as the latter is still needed.
“A recent report by the Bank for International Settlements and a group of seven central banks, including the Fed, assessed the feasibility of CBDCs in helping central banks achieve their policy goals.” The Fed chairman revealed this in a recorded video that was presented at a payments conference in Basel.
The potential “digital dollar” will be integrated alongside physical cash without disrupting the current payment system.
“In relation to today’s topic, one of the three core principles highlighted in the report is that a CBDC must coexist with cash and other types of money in a flexible and innovative payment system.”
Although the digital dollar has already been mentioned several times in the media, no concrete developments have emerged yet.
Powell stated that the COVID-19 pandemic has played a critical role in fueling innovation within governments in the way financial transactions are processed and operated. He made his fairest assessment of the Federal Reserve’s overall performance, saying it had made significant strides in the face of stumbling blocks.
“The COVID crisis has sharpened the focus [on] the need to address the limitations of our current cross-border payments regime. And as this conference clearly shows, despite the challenges of last year, we have still made important progress. “
In the comments of the Fed chairman on the “digital dollar”, the remarks made by Christine Lagarde, President of the European Central Bank, on a digital euro are repeated. Last year, Lagarde argued that the digital euro would serve to complement, not replace, cash. She also suggested that this would help position government money at the center of payment systems across the region.
Countries like China and England are reportedly working on developing their digital currency versions, with the former already embarking on piloting their digital currency.