The U.S. does not want cash to go extinct in the presence of a CBDC, according to the Fed’s chairman.
Many expect that a time could soon come when central bank digital currencies, or CBDCs, replace physical dollars once and for all. Comments from U.S. Federal Reserve Chairman Jerome Powell, however, indicate that this may not be the case.
The chairman’s comments were filmed and later shown at an event in Switzerland on Thursday, according to an article from Bloomberg. The Committee on Payments and Market Infrastructures put on the event. In his talk, Powell mentioned the U.S.’ central bank and six other central banks collaboratively put together a report in conjunction with the Bank for International Settlements, or BIS. The report weighed CBDCs’ viability in relation to governmental goals.
Powell added, as per Bloomberg’s reporting:
“Relevant to today’s topic, one of the three key principles highlighted in the report is that a CBDC needs to coexist with cash and other types of money in a flexible and innovative payment system.”
Across the board, countries have approached CBDCs differently. Some nations, such as China, have raced toward creating a CBDC. The Bahamas unveiled its CBDC in the fall of 2020. The U.S., however, has ridden a slower train, prioritizing quality over speed, although comments from Powell in early 2021 emphasized the eventual importance of a CBDC.
In his recent comments, Powell explained, as per Bloomberg’s reporting:
“The Covid crisis has brought into even sharper focus the need to address the limitations of our current arrangements for cross-border payments [...] And as this conference amply demonstrates, despite the challenges of this last year, we still have been able to make important progress.”
COVID-19 has spurred a number of economic changes since prevention measures were enacted in March 2020. Just over one year ago, Bitcoin crashed below $4,000. The asset has since rallied to prices over $60,000.