The US Federal Reserve Bank is ready to release a document on a central bank digital currency (CBDC), according to Fed Chairman Jerome Powell. The Fed chairman spoke at a press conference on Sept. 22 and the remarks were highly anticipated as the world waits to see what the US will do with respect to a possible CBDC.
Is the US running late?
Powell was keen to point out that no official decision had been made and that the agency was still looking into the benefits and risks. Authorities seem focused on creating a stable and reliable asset, which has long been touted as an important priority. He said:
"We are working proactively to consider whether to issue a CBDC and, if so, in what form."
The discussion paper the Fed has been working on will address public policy issues. It will also ask the public and lawmakers for their comments on the document.
A US CBDC could be the government's way of handling potential stablecoin problems. The special good has been identified as a key concern for US lawmakers. The United States Treasury working on regulating the sector. It is also worth noting the concern that lawmakers around the world have with Facebook's Diem project, which has had to change its design policy to appease regulators.
One of the reasons a CBDC has been delayed is because some individuals within the government are concerned that the risks may outweigh the benefits. Federal Reserve Governor Lael Brainard urged the government to at least look into the matter. As countries like China are doubling the digitization of their economy, and the United States must too, according to the Governor.
US accelerates CBDC research
While many other countries are actively working on a CBDC, with China leading the way, the US has been mostly silent for many years. It wasn't until 2021 that he garnered his interest in a CBDC, along with a greater focus on regulation in general.
The country has considerably hesitated over its decision to work on a CBDC, with officials generally saying they want to get the design right, instead of rushing. Powell, who doesn't think the United States is lagging behind, said:
“It is more important to do it well than to do it quickly. We are the world's reserve currency and I think we are in a good place to do that analysis and make that decision ”.
More substantive news on a CBDC could come very soon as other agencies prepare to regulate the sector. Overall, the US now appears to be taking the cryptocurrency market very seriously.