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“We have to understand it first and better,” but what if it’s too late?

June 18, 2020

At a hearing on June 17 before the House Financial Services Committee, Federal Reserve or Fed chairman Jerome Powell exchanged views with Tom Emmer (R. -MN) on a digital central bank currency.

Are there advances in the digital dollar?

Emmer asked, “What are the Fed’s key moves recently to understand and experiment with this technology?”

Powell said that The Fed had to be aware of the problem, but did not mention any major measures:

“We owe it to the public that we serve to keep up to date. If this is something that is good for the United States economy and the world reserve currency, the dollar, then we must be there and understand it first and best. “

The controversy over private participation.

“We have to understand it first and better,” but what if it’s too late?“We have to understand it first and better,” but what if it’s too late?

In the same round of questions, Powell said he was not interested in the private sector getting involved:

“The private sector is not involved in creating money, the central bank does. […] I don’t think the public likes the idea that private employees who are not responsible for the common good are responsible for something so important. “

Powell’s vision of a digital dollar clearly contradicts that of the Digital Dollar Project, for example. Emmer described the project as a partnership between the public and private sectors as the engine of a digital dollar.

Last week, the Congressional Fintech Task Force (of which Emmer is the senior member) held a hearing on the same subject, along with the founder of the Digital Dollar Project and former CFTC President J. Christopher Giancarlo as a witness.

A race against China

The question of the digital dollar has received more and more attention since China apparently has its digital renminbi pilot ready.

So it can be an illusion or a political safeguard for the Fed to understand a CBDC first. Many see the United States lose the race against China in a way that could cost the dollar its global currency status.