Reuters: Powell says CBDC could undercut need for stablecoins and cryptocurrencies

Federal Reserve chair Jerome Powell said one of the stronger arguments for the US central bank to set up a digital currency is that it could undercut the need for private alternatives when asked during a congressional hearing if doing so would be a more viable alternative than having multiple cryptocurrencies or stablecoins emerge in the payments system.

“I think that may be the case and I think that’s one of the arguments that are offered in favor of digital currency,” Powell said during a hearing before the US House of Representatives Financial Services Committee. “That, in particular, you wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital US currency – I think that’s one of the stronger arguments in its favor.”

Fed officials will be broadly examining the digital payments universe in a discussion paper that could be released in early September, Powell said. He described it as a key step that accelerates the Fed’s efforts to determine if it should issue a central bank digital currency, or CBDC.

Powell reiterated that if the Fed were to move forward with developing a CBDC, it would consult with Congress and the public. He repeated his view that as the holder of the world’s reserve currency, it would be more important for the United States to “get it right” than to move quickly.

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