Fed Chairman Powell: ‘We’re looking carefully at issuing digital dollar’

Federal Reserve Chairman Jerome Powell says the central bank is looking “carefully” at the prospect of issuing a digital dollar now that there is technology allowing the bank to do so.

“We are looking carefully, very carefully, at the question of whether we should issue a digital dollar and it’s something that central banks around the world are looking at,” Powell said before the Senate Banking Committee on Tuesday.

“The technology now enables us to do that and it also enables private sector actors to create their own kind of digital quasi-money type of instruments,” he continued.

Powell would mentioned that if the Federal Reserve is to move ahead with a digital dollar the bank would have to make sure it is done correctly considering the U.S. dollar is the world reserve currency.

“We are the world reserve currency and we have a responsibility to get this right. We don’t need to be the first.”

He also admitted that the idea is something the Fed is “investing time and labour in.”

Central banks around the world have grappled with the idea of issuing a digital form of currency and some have even followed through with the idea. For example, the Central Bank of The Bahamas launched a Central Bank Digital Currency (CBDC) in October called the Sand Dollar.

Morocco’s central bank, Bank-Al-Maghrib, is also considering issuing its own CBDC.

Most notably in the realm of CBDCs, the Chinese government launched a pilot program in 2019 for a digital version of the yuan. The experimental program recently got a boost into the mainstream economy when China’s biggest online retailer announced it has developed the first virtual platform to accept the digital currency.

“The digital currency is nothing more than a virtual banknote or coin that exists in a digital wallet on your smartphone instead of a billfold or a purse. The value of the digital currency is backed by the state, just like traditional fiat currency,” Schiff Gold reported.

Reuters called the digital yuan “one of the world’s most advanced ‘central bank digital currency’ initiatives, as authorities globally respond to threats from private currencies such as bitcoin and Facebook’s Libra.”

While the idea of a digital currency seems fitting for the digital age we live in, there is worry about the privacy and government control implications of such currencies going live and replacing physical cash.

The government can easily track digital payments. As Bloomberg put it in an article published when the pilot program was launched, digital currency “offers China’s authorities a degree of control never possible with physical money.” Specifically, a digital currency might allow the Chinese government to more closely monitor mobile app purchases,  accounting for about 16% of the country’s GDP Bloomberg describes just how much control a digital currency could give Chinese officials.

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It’s easy to shrug off China’s experimentation with digital currency as something going on “over there,” but US policymakers like the idea too. In fact, they have already toyed with the idea of a digital dollar. A Democratic proposal for stimulus payments in the wake of the coronavirus pandemic featured digital currency deposited into digital wallets. Some officials admitted it would potentially allow the government to control how the money was spent.

The bottom line is the tighter control governments have over money, the tighter control they have over you. – Schiff Gold

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The post Fed Chairman Powell: ‘We’re looking carefully at issuing digital dollar’ appeared first on Planet Free Will.

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