TL;DR: During a question and answer session on 6 September 2019, Federal Reserve Chairman Jerome Powell told Thomas J. Jordan, chairman of the Swiss National Bank at an event hosted by the Swiss Institute of International Studies in Zurich, that the public doesn’t appear to want cryptocurrency. He made the point to underscore the Fed wasn’t considering its own crypto version, that Facebook Coin Libra must be held to the highest standards, and how he does not view the US central bank’s role as one of stifling innovation.
Federal Reserve Chairman: Consumers Not Clamoring for Crypto
Chairman Powell shrugged to the question of whether central banks were “missing out” on the “opportunities” of digital currencies. “I don’t think so, no,” he answered. “Of course, we’re following very carefully the whole question of digital currencies. It’s not something that we’re actively considering … other central banks are more than we are.” He also emphasized “cybersecurity” as his greatest worry, noting it is one thing to have counterfeiting done by paper in the physical world, but that digital currencies pose grave new threats to the monetary system such being able to “hack into a cyber currency.”
“It’s not clear to us that there’s really a demand for this,” Powell continued. “Consumers have plenty of payment options. They’re not clamoring for this. I don’t want to sound like I am ruling it out. There’s another question, too. If people are leaving their money in cyber currency, and holding it there, they’re not putting it in a bank. What happens with banks is, people deposit their money and banks lend the money out. What will happen to intermediation, the whole intermediation process? What will happen if everyone is just investing in this cyber currency?”
Highlight: “We are following the whole question of digital currencies,” says Fed Chair Jerome Powell. “It’s not something that we are actively considering. For us, it raises significant issues that we would want to see resolved.”https://t.co/xpAujlCWBd pic.twitter.com/n5M5XDU5AZ
— Yahoo Finance (@YahooFinance) September 6, 2019
He was also keen to assure he and Fed were for financial innovation, but at this point and time “we don’t see digital currencies from a central bank as something happening in the near term.” When asked about Facebook Coin, Libra, Powell once again spoke of “responsible financial innovation” and how the Fed was in favor of that concept in general.
Libra, as Powell has stated previously, could, if it gained adoption have a giant impact and quickly on the world’s financial system. “Because of that, we would think that Libra would need to be held to the highest standard,” he insisted. “It is not obvious to see how that would happen under our current regulatory system. It’s the kind of thing where we’ve said this is not going to be a sprint to implementation; this is going to be a careful, thoughtful conversation about how we can protect the public.”
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.
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