Federal Reserve To Dip Toes In The Cryptocurrency
Goldman Sachs (GS) Chief Economist Jan Hatzius believes that it is possible for Federal Reserve to come up with a digital currency. Hatzius’s comment was preceded by Federal Reserve CEO Jerome Powell who explained the requirement of a parallel currency in a presentation on May 20.
Powell said, “The effective functioning of our economy requires that people have faith and confidence not only in the dollar, but also in the payment networks, banks, and other payment service providers that allow money to flow on a daily basis…Our focus is on ensuring a safe and efficient payment system that provides broad benefits to American households and businesses while also embracing innovation.”
However, Hatzius doesn’t think that this will happen anytime soon but assumes that if Federal Reserve completes the research on the subject, the introduction of the currency will not hamper the dollar. ” “The Fed I think partly because of the pre-eminent international role of the dollar is going to be slower than other central banks in introducing a digital currency. And there are quite a number of central banks globally that are hedged at this point and the Fed is still in the research stage. But ultimately, I think there is an appetite for introducing a digital currency…I think we will move cautiously because there is no appetite on the part of the Fed or other central banks to really potentially undermine the current payment system and financial system.” added Hatzius in an interview with Yahoo Finance.
Monday, a member of the Federal Reserve Board of Directors, Lael Brainard also referred to a more efficient payment system. She said, “Advances in technology, including the use of distributed ledgers and smart contracts, may have the potential to fundamentally change the way in which payment activities are conducted.”
The entire movement has been partly put into a faster motion after China announced their digital Yuan to counter the cryptocurrencies within their borders. However, Brainard attributes the urgency as an effect of the pandemic. She added, “While the large majority of pandemic relief payments moved quickly via direct deposits to bank accounts, it took weeks to distribute relief payments in the form of prepaid debit cards and checks to households who did not have up-to-date bank account information with the Internal Revenue Service.”
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