The creation of an official digital version of the US dollar could help the country maintain its global dominance as other countries issue their own, according to Fed Chair Jerome Powell, who weighed in with generally positive remarks on a contentious topic at the central bank that has policymakers split.
Powell remarked in his opening comments to a research conference on the dollar’s worldwide functions that a US CBDC (central bank digital currency) “might potentially assist sustain the dollar’s international standing.”
The Federal Reserve has wrapped up a four-month public consultation session in which it sought feedback on the concept of a digital currency. Lael Brainard, the Fed’s vice chair, has emerged as a vocal advocate, while Fed Governor Chris Waller has spoken out against it.
“As we examine comments,” Powell continued, “we will be thinking not just about the current situation of the globe, but also about how the global financial system could change over the next 5 to 10 years.”
According to the Atlantic Council, ten nations have already established central bank digital currencies, with another 105 considering the idea, raising concerns that the dollar would lose part of its supremacy to China.
The currency is still supported by core fundamentals, such as a dedication to transparency, the rule of law, and the Fed’s complete independence, according to Powell.
Furthermore, according to Powell, the Fed’s dedication to its price stability objective contributes to broad trust in the dollar as a store of value.