Powell "Thoughtful and Cautious Deliberation Process Begins"
"Expected to Complement Rather Than Replace the Dollar"
Estimated Change in Stance on China's Digital Yuan and Cryptocurrency Expansion
[Asia Economy New York=Special Correspondent Baek Jong-min] The United States Federal Reserve (Fed) is conducting research on Central Bank Digital Currency (CBDC) and announced that it will reveal specific details by this summer.
Initially, the Fed was not in a hurry to introduce a digital dollar, but as China accelerated the introduction of the digital yuan, concerns grew that the U.S. might fall behind in the competition, prompting the Fed to revise its stance.
Following the Treasury Department's announcement on the same day to strengthen taxation on cryptocurrency transactions, the Fed also released its position on digital currency, leading to analyses that the U.S. government is taking full-scale measures to respond to the spread of cryptocurrencies and digital currencies.
Chairman Powell, in a video message released on the 20th (local time), stated that the Fed is working to develop its own digital currency and plans to publish a research paper by this summer.
Although Chairman Powell did not present specific plans for the development and implementation of the digital dollar, he mentioned technological advancements and explained that the Fed is carefully monitoring and adapting to innovation.
He particularly asserted, "We will lead the development of digital currency." Fox News evaluated this as the U.S. expressing its position to ensure that China’s digital yuan does not take the lead in digital currency.
Chairman Powell also emphasized, "Our focus is on ensuring a safe and efficient payment system that provides broad benefits to American households and businesses while embracing innovation."
He stressed, "Before pushing forward with the digital dollar, we need to gather extensive opinions," and anticipated that the publication of the paper marks the beginning of a thoughtful deliberation process for the introduction of the digital dollar.
This can be interpreted to mean that the digital dollar will not replace the existing dollar but will focus on serving as a complement. Chairman Powell also confirmed that the digital dollar will not replace banknotes.
He did not forget to warn that digital currency could pose potential risks to the broader financial system.
Chairman Powell and other Fed officials have emphasized that although China is accelerating the introduction of the digital yuan, the Fed does not need to compete aggressively.
Chairman Powell stated again, "Technological advancements are providing new opportunities for central banks like the Fed. Even if the digital dollar uses various structures and technologies, it ultimately must be usable by the public."
Within the Fed, the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT) are jointly researching digital currency.
Chairman Powell’s announcement on this day attracted even more attention as it came shortly after the U.S. Treasury Department disclosed a policy requiring the IRS to be notified of cryptocurrency transactions exceeding $10,000.
The Treasury Department expressed concerns that cryptocurrencies are being used for a wide range of illegal activities, including tax evasion.
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