Monday, June 21, 2021

The Federal Reserve - Competitor to BitCoin?

As America's Central Bank asks for public comments on issuing its own digital currency, will we see the US become a player in the crypto-currency world? "Technological advances are driving rapid change in the global payments landscape," says a spokesperson for the U.S. federal reserve, the country's central banking system. They announced this week that they're "studying these developments" and exploring ways that the central bank "might refine its role as a core payment services provider and as the issuing authority for U.S. currency."

We read over at Engadget:

"...took a step toward developing a digital currency as it announced plans to publish a research paper on the subject," seeking public comment on its pros and cons for payments, financial inclusion, data privacy, and information security. But the Federal Reserve emphasizes that "before making any decision on whether and how to move forward with a U.S. central bank digital currency," their paper "represents the beginning of what will be a thoughtful and deliberative process" that has more than one possible outcome. "Irrespective of the conclusion we ultimately reach, we expect to play a leading role in developing international standards for central bank digital currencies, engaging actively with central banks in other jurisdictions as well as regulators and supervisors here in the United States throughout that process."

Their announcement notes America's central bank has already been exploring the benefits and risks of issuing a digital currency "for the past several years," but emphasizes they're exploring it "as a complement to, and not a replacement of" current systems. And the Reserve also state pointedly that "To date, cryptocurrencies have not served as a convenient way to make payments, given, among other factors, their swings in value," before the announcement switches its attention to stablecoins pegged to the value of a non-virtual currency. But even there, the interest seems to be as much regulatory as it is monetary. "As stablecoins' use increases, so must our attention to the appropriate regulatory and oversight framework. 

"This includes paying attention to private-sector payments innovators who are currently not within the traditional regulatory arrangements applied to banks, investment firms, and other financial intermediaries."

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