The rise of cryptocurrencies poses important questions to central banks: New York Fed chairman

John Williams, the head of the New York Federal Reserve, urged central banks to keep in mind the emergence of cryptocurrencies before issuing their own CBDCs.

Federal Reserve Bank of New York President John Williams said the rapid development of virtual assets challenges central banks' desire to launch their own CBDCs. He advised politicians to consider how cryptocurrencies would work efficiently alongside physical money.

Cryptocurrencies raise questions for central banks

John Williams, president and chief executive of the Federal Reserve Bank of New York, reacted to the recent presentation by former Bank of England Governor Mark Carney who urged central banks to look into digital assets.

The senior executive believes central banks and the Federal Reserve, in particular, shouldn't leave unanswered questions about blockchain technology and its regulation if they are willing to issue their own CBDCs:

"Before central banks such as the Federal Reserve can issue their own CBDC, several important issues related to blockchain technology and regulation need to be addressed."

Williams said digital assets should be successfully implemented in the financial world alongside physical money. Country officials must work to achieve this and adjust the appropriate regulations.

59-year-old economist John Williams is the 2011th president of the Federal Reserve Bank of New York. Previously, he held the same role but on the West Coast as he was in charge of the Federal Reserve Bank of San Francisco from 2018 to XNUMX. Additionally, Williams is currently Vice Chair of the Federal Open Market Committee.

The United States should be cautious with the CBDC

Last year, Fed Chairman Jerome Powell said the US should not strive to be the first country to launch its own central bank digital currency, but focus on issuing the right way:

"The United States is committed to carefully and carefully evaluating the potential costs and benefits of a CBDC to the US economy and payments system."

Back then, he admitted that digital currencies have the potential to improve the current payment system. However, the Federal Reserve had not made a final decision on launching its own.

On another occasion this year, Powell shared his point of view on bitcoin. He speculated that the primary cryptocurrency remains a form of investment speculative that it will not replace the US dollar due to its higher volatility. On the other hand, it has the ability to do it with gold.