Fed moves cautiously on digital currency, as Canada launches research project
/U.S. Federal Reserve Chair Jerome Powell told a forum on digital payments hosted by the International Monetary Fund that it’s more important for the U.S. to get a central bank-backed digital currency right than to be the first country rolling it out.
Why should we care?
Powell’s mention of central bank-backed digital currencies echoes recent comments from Fed officials expressing caution over the implementation of such a vehicle. In August, Fed Governor Lael Brainard said the Federal Reserve Bank of Boston was working with MIT researchers to test a hypothetical digital currency to learn more about the opportunities and risks of central bank-backed digital currencies. The comments indicate evidence of the regulator's openness to study central bank-backed digital currencies after blowback from Facebook’s Libra digital currency initiative. Despite the potential, Powell highlighted that difficult policy and operational questions still need to be thoroughly evaluated, including fraud and cyberattacks. Meanwhile, Canada’s central bank posted a job opening for an economist who will be part of a large-scale research effort that will address the “monitoring framework for money and payments and the contingency planning for a central bank digital currency.”