Federal Reserve Chairman Jerome Powell recently signaled that the Fed will “move with great care and transparency with regard to developing a central bank digital currency.” The comments from Powell were made during a virtual event held by the Bank for International Settlements. The event held various discussions on digital banking with Powell as one of its panelists.
Powell reiterated his opinion that cryptocurrencies are “highly volatile and therefore not really useful stores of value.” The Fed Chair continued, stating that they are also “not back[ed] by anything.”
Various government departments, including the Federal Reserve, have continued to echo these opinions about cryptocurrencies over the past few years. While there is speculation that the Fed may introduce a competing cryptocurrency in the near future, Powell outlined the major costs of doing so.
On this very issue, Powell said that it would require “buy-in from Congress, from the administration, from broad elements of the public, and we haven’t really begun the job of that public engagement.” Experts within the field say that this could take years to determine a cost-benefit analysis. This analysis is mostly based on theory, which means that actual implementation may take longer.
Instead of adopting this technology so quickly, various U.S. government departments continue to warn individuals about cryptocurrency and the dangers of investing in them. The Securities and Exchange Commission (SEC) continues to inform individuals about potential scams regarding Bitcoin and other cryptocurrencies at this time. As Powell stated, it would also require Congressional approval, which is almost never guaranteed.
This will be an interesting development as Bitcoin and other popular cryptocurrencies continue to surge amid market uncertainty. As always, exercise caution with your investments, especially with ones as volatile as cryptocurrencies.