Blockchaingrade
Bitcoin CBDC central bank digital currency Chairman China Crypto Cryptocurrency Digital Yuan Facebook Fed Federal Reserve financial services committee House of Representatives Jerome Powell libra News testimony US

Fed Chair Powell Reveals US Response to China’s Digital Yuan, Libra, Public Payments Ledger


In his testimony before the House Financial Services Committee, Federal Reserve Chairman Jerome Powell answered a number of questions regarding digital currencies. While stating that “a ledger where you know everybody’s payments” is not a problem in China, he believes it is not attractive for the U.S. Admitting that Facebook’s Libra project was a wake-up call to the Fed, the chairman provided a progress update of the Fed’s digital dollar.

Also read: Bitcoin, Tesla Stock, Tron: How Warren Buffett Got His First Bitcoin

Public Ledger Not Attractive for the US

Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, testified before the House of Representatives’ Committee on Financial Services on Tuesday. The hearing, entitled “Monetary Policy and the State of the Economy,” was chaired by Rep. Maxine Waters.

Illinois Representative Bill Foster asked Powell a number of questions about digital currencies, including the progress of the digital dollar, citing that the Chinese claims they will be rolling out their digital yuan “sometime very quickly.”

Fed Chair Jerome Powell Reveals US Response to Digital Yuan, Libra, Public Payments Ledger
Fed Chairman Jerome Powell giving his testimony before House Financial Services Committee on Tuesday.

“Do you feel you have adequate visibility into what the Chinese are doing on this. Do you have working-level contacts that give you some idea of what their rollout is likely to do, like likely to look like?” Foster asked. Powell quickly answered, “Yes, I mean, we certainly have, that.” However, he clarified that the circumstances in the U.S. are completely different from China, elaborating:

For example, the idea of having a ledger where you know everybody’s payments is not something that would be, you know, particularly attractive in the United States context. It’s not a problem for China.

Enormously Important to Keep Currency Centralized

Referencing his discussion with Governor Lael Brainard, Foster asked Powell: “Do you think that establishing a digital dollar would help ensure that the U.S. dollar continues to serve as the core of the U.S. and the world’s financial system?” The Fed chairman replied, “Having a single government currency at the heart of the financial system is something that has served us well,” advocating for “preserving the centrality of a central widely accepted currency that is accepted and trusted is an enormously important thing.”

Citing that the private sector is innovating and every major central bank is currently studying central bank digital currencies, the chairman remarked: “It’s very much incumbent on us and other central banks to understand the costs and benefits and trade-offs associated with a possible digital currency.”

Fed Chair Jerome Powell Reveals US Response to Digital Yuan, Libra, Public Payments Ledger
Rep. Bill Foster

Foster also asked Powell how he would characterize the Fed’s progress on a central bank digital currency compared to other countries. The Illinois representative pointed out that one of the reasons why there is so much concern about the Libra project is that it would immediately have scale. He emphasized that another entity in a position to achieve similar scale is the Chinese government.

“How would you characterize our ability to respond to this potentially competitive threat?” Powell was asked. “We are working hard on it. We have a lot of projects going on, efforts going on, on that right now,” he replied, noting that the U.S. hasn’t had a problem of people moving away from cash as several European countries have. According to the Fed chair, “The amount of cash in the U.S. economy continues to grow faster than nominal GDP.” He continued:

There are many questions that need to be answered around digital currency for the United States, including cyber issues, privacy issues, many many relational alternatives present themselves.

“So we are going to be working through all that and doing all that work thoroughly and responsibly,” Powell added.

Fed Chair Jerome Powell Reveals US Response to Digital Yuan, Libra, Public Payments Ledger
Fed Chairman Jerome Powell

Libra: The Fed’s Wake-Up Call

Noting that the adoption of cell phone payments could happen in a couple of years, Foster asserted that the U.S. should be able to respond quickly when that happens, such as with a digital dollar. “I completely agree with that,” Powell responded, adding:

Frankly, Libra really lit a fire under that and it was a bit of a wake-up call that this is coming fast and could come in a way that it’s quite widespread and systemically important, fairly quickly if you use one of these big tech networks like Libra did.

In her opening speech, Waters also urged Powell to keep a watchful eye on Facebook and its Libra project. She asserted that Facebook’s planned Libra cryptocurrency and digital wallet launch “could have profound implications on monetary policies and compete with our own U.S. dollar.” Waters and a few other Democrats previously asked Facebook to halt the Libra project until Congress has time to examine the issue of big tech companies launching digital products and take action.

What do you think of Powell’s testimony on digital currencies? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.


Images courtesy of Shutterstock and PBS.


Did you know you can buy and sell BCH privately using our noncustodial, peer-to-peer Local Bitcoin Cash trading platform? The local.Bitcoin.com marketplace has thousands of participants from all around the world trading BCH right now. And if you need a bitcoin wallet to securely store your coins, you can download one from us here.

Tags in this story
Bitcoin, CBDC, central bank digital currency, Chairman, China, crypto, Cryptocurrency, Digital Yuan, Facebook, Fed, Federal Reserve, financial services committee, House of Representatives, jerome powell, Libra, testimony, US
Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.








Source link

Related posts

The future is crowdfunded – Blockchain Pulse: IBM Blockchain Blog

blockchaingrade

Did Binance Just Cause a $6 Billion Dump?

blockchaingrade

A New Bank for Crypto Traders Has Opened in Puerto Rico

blockchaingrade

Leave a Comment