Jay Powell on Thursday accelerated the Federal Reserve’s consideration of a possible digital version of the dollar that would be controlled by the US central bank.
The Fed chair said it would seek public comment on the idea, amid pressure from some US lawmakers and growing interest in so-called central bank digital currencies (CBDCs) around the world.
In a rare video statement released on the Fed’s website, Powell stressed there were potential benefits and pitfalls associated with digital currencies, and highlighted the growth of so-called stablecoins, private digital currencies pegged to the dollar, which he said could pose a threat to the financial system.
“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,” he said.
“Our focus is on ensuring a safe and efficient payment system that provides broad benefits to American households and businesses while also embracing innovation.”