Fed chair: the emergence of a digital dollar would dent Bitcoin’s popularity

The head of the U.S. Federal Reserve (Fed) Jerome Powell questioned the need for stablecoins and cryptocurrencies after the emergence of a digital version of the dollar. Such remarks came during a Q&A with House members following his testimony on the state of the economy.

“Stablecoins and cryptocurrencies would be of no use to you if you had a digital dollar. This is one of the strongest arguments in its favour.”, Powell said.

The Fed chair emphasized that the dollar is not under threat of losing reserve currency status even after the appearance of CBDC in other countries.

“The dollar has no rivals. All that is needed for reserve status lies with the United States. The priority should be to get the digital version of the currency right, not to rush its rollout.”, he explained.

Jerome Powell compared stablecoins to money-market funds and savings banks. The latter two categories are regulated, he stressed.

“There are no rules for stablecoins. If stablecoins become a significant part of the payments universe, which we deem unlikely, then a regulatory framework will be required, one that does not yet exist.”, he explained the Fed chief.

Earlier, it was reported that staff of the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology will complete the work on creating a prototype of the digital dollar by July.

The Fed began in February 2020 studying this possibility. The start of development of the digital dollar became known in August 2020.

In June, the agency’s vice chair Randall Quarles urged not to fear stablecoins and questioned the need for CBDC.

Earlier, Boston Fed head Eric Rosengren called Tether “a challenge” to financial stability.

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