US Congressman Challenges Fed Chair on Chinese Digital Currency Threat
US Congressman Challenges Fed Chair on Chinese Digital Currency Threat
At a hearing on monetary policy earlier today, United States Representative Bill Foster (D-IL) challenged Federal Reserve Chair Jerome H. Powell on U.S. central bank digital currency (CBDC) advances. Let’s check to US Congressman Challenges Fed Chair on Chinese Digital Currency Threat.
Foster wants a Digital Dollar
The questioning started with Foster asking Powell:
“Do you think that establishing a digital dollar would help ensure that the U.S. dollar continues to serve as the core of the U.S. and the world’s financial system?”
Powell decided on the dollar’s value for the US financial system:
“I think having a single government currency at the heart of the financial system is something that has served it well, it’s a basic thing that hasn’t really been in question.”
As to the role of a CBDC in particular, Powell was cautious. “Whether a digital currency moves us along that path is an open question,” he said. “Every current central bank is taking a deep look at that.”
Foster urged the US administration to tackle the CBDC problem sooner rather than later
While comparing with some existing CBDC projects, in responding to China, Foster asked Powell’s current plan: “How would you characterize our ability to respond to this potentially competitive threat?” Foster said China was able to scale its digital Yuan using its established cell phone payment system.
In response to the questions, Powell pointed out that when faced with central digital currency, the U.S. and China are different: “They are a completely different institutional context.”
Foster also expressed concern that if the Federal government fails to respond and quickly issue a proposal for a digital currency, potential competitors such as China could roll out CBDCs and gain an upper hand. He specifically cited China’s plan to implement the digital Yuan among its Belt and Road initiative countries, which could jeopardize the status of the dollar’s world reserve currency.
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Published at Wed, 12 Feb 2020 12:54:17 +0000
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