A few years ago, a government or central bank launching its own digital currency was a foreign concept. But since Facebook and a swath of partners unveiled the Libra cryptocurrency project in June 2019, those in power have sprung into action, looking into ways it could combat the rise of corporate currencies meant for an international audience.
Thus far, China has led the national digital currency race, with reports indicating the country is on the verge of rolling out a digital version of the yuan to millions in the near future.
But, it seems that the U.S. (likely feeling threatened by China) is joining the race, with the Federal Reserve chairman, Jerome Powell, admitting in a meeting on the Hill that the launch of Libra has lit a proverbial fire under the government’s behind to start working on digital currency:
Libra lit a fire and it was a bit of a wakeup call that this was coming fast, and could come in a way that is quite widespread and systemically important.
Federal Reserve Chairman Confirms Digital Currency Efforts
In Tuesday’s meeting of the House of Representatives Committee on Financial Services, Powell said that the central bank for America has started to really get to work on digital currency efforts:
We’re working hard on it, we have a lot of projects going on, lot of efforts going on on that right now.
The Federal Reserve leader did admit that there remain issues around the deployment of a digital currency, “including issues of, cyber issues, privacy issues, [and] many many operational alternatives,” though admitted that the launch of Libra has pushed forward the timeline on digital currency for the central bank.
Not Only Digital Dollar Supporter
Powell isn’t the only one in high places, so to say, supporting a digital dollar.
Per previous reports from Blockonomi, former chairman of the Commodity Futures Exchange Commission (CFTC), Christopher Giancarlo, just created the so-called Digital Dollar Foundation.
This new organization, the report claims, is effectively a think-tank that will focus on the turning of the dollar into a digital asset based on blockchain or a blockchain-like technology.
Another former CFTC official, Daniel Gorfine, a private equity company, and information technology giant Accenture are supporting the project.
There’s also lawmakers U.S. Representative Bill Foster (D-Illinois) and U.S. Rep. French Hill (R-Arkansas), who in October sent a letter to the chairman of the Federal Reserve about digital money. In it, they wrote:
With the potential for digital currencies to further take on the characteristics and utility of paper money, it may become increasingly imperative that the Federal Reserve take up the project of developing a U.S. dollar digital currency.
They added that should the U.S. drop the ball in this field, the unparalleled primacy of the USD in the global economy could begin to falter.
Strong 180° From Prior Stance
Powell’s comments on digital currencies are actually quite a reversal from his contemporaries’ previous position on digital currency.
In a December meeting of the House of Representative’s Financial Services Committee regarding the topic of America’s financial stability, Treasury Secretary Steven Mnuchin said that the U.S. is unlikely in need of its own digital currency in the near future:
[Fed Chairman] Powell and I have discussed this at length: we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency.