Fed Chairman Jerome Powell Talks Digital Currencies at IMF

The chair of the Federal Reserve discussed digital currencies at the IMF. Here’s what he said.

US Federal Reserve chair Jerome Powell spoke at the annual meeting of the International Monetary Fund (IMF) today at 8am EDT, where he addressed cross-border payments and digital currencies. 

Powell has alluded to the power of digital currencies before. In February of this year, he described Facebook’s Libra project as a “wake-up call.” He also said that whether a digital currency moves the US in the direction of preserving the centrality of a trusted and accepted currency is “an open question.” Today, the audience tuned in for any clarity on the US’ plans for a digital currency.

“There are a number of ways that a CBDC might improve the payments system, and it is mainly this area that motivates our interest,” said Powell during the meeting, identifying a principal reason as to why a CBDC may come to the United States in the future.

“Powell is very much on the traditional side of finance, but some of his recent comments have been forward-looking and his very attendance signals recognition of the importance of digital currencies,” Jason Deane, Bitcoin analyst at Quantum Economics, told Decrypt. 

Another interesting question is how the US’ stance relates to China’s recent progress on its digital yuan, the DCEP, which is already well underway.

The city of Shenzhen has already issued 10 million yuan in digital currency to 50,000 randomly selected citizens through red envelopes, according to Chinese website Weixin. The winners, according to the website post, are able to spend these digital funds “at 3,389 merchants in Luohu District.”

According to Powell however, each country has to carefully consider their own stance on CBDCs.

In February, Powell picked out “cyber issues and privacy issues” as two areas that need to be considered for the United States. Today, he alluded to these issues once again. “For the Federal Reserve, our main focus is on whether and how a CBDC could improve an already safe, effective, dynamic and efficient domestic payments system.” 

In addition, Powell said that the United States, unlike other jurisdictions, already has a highly banked population. “We have a highly banked population so that many—although not all—already have access to the electronic payments system.” 

“We do think it’s more important to get it right than to be the first,” Powell added.

Looks like we will have to wait before the US announces a digital currency.