The risks of CBDC – The regulation must be clear

The risks of CBDC - The regulation must be clear

The US Federal Reserve System explores the concept of digital currency of the central bank (CBDC) and the associated problems and risks. The statement was made by Federal Reserve Board President Jerome Powell in a statement letter addressed to the Congress.

Congressmen French Hill and Bill Fosters asked the US central bank if it plans to launch a CDBC in the future.

In his response, Powell presented the Federal Reserve’s views on this idea. He stressed that, although the agency is not currently developing a CBDC, it has evaluated and continues to evaluate the costs and benefits of such an initiative

Experiments to identify CBDC risks

Powell revealed that the agency is conducting its own small-scale, research-focused experiments to gain practical experience and to better understand the opportunities and limitations as well as the risks of CBDC.

Read This Now:   Bitcoin: the 4 technical thresholds of the moment on the price of BTC

He stressed that, before deciding to issue a CBDC, the Federal Reserve must address a number of legal issues. These include monetary and payment policies, financial stability, supervisory and operational issues, and their vulnerability to cyber attacks.

“If it is designed to be financially transparent and provide guarantees against illicit activity, a general purpose CBDC may require the Federal Reserve to keep track of all payment data using digital currency. At times, this raises issues regarding data privacy and information security. ”

Powell also noted that a number of design features for developing a CBDC should be considered. These included the existence of a reserve issue, the development of a payment system and the management of the idea of ​​anonymity in owning and trading a CBDC.

Foster: We don’t want to stay behind technology

The two US congressmen who asked for the Federal Reserve’s point of view expressed their enthusiasm for the response.

French Hill appreciated the financial institution’s precaution when it comes to adopting new technological concepts:

“This decision would have far-reaching implications for every aspect of America’s monetary policy and requires a deep level of analysis to ensure proper implementation.”

For his part, Bill Fosters emphasized that technology is evolving rapidly and the US should not lag behind:

“My main concern is not to be surprised by the rapid evolution of other countries, which could put our economy at a competitive disadvantage and threaten the influence of the US dollar worldwide.”

Notice: ob_end_flush(): failed to send buffer of zlib output compression (1) in /home/gamefeve/ on line 5373

Notice: ob_end_flush(): failed to send buffer of zlib output compression (1) in /home/gamefeve/ on line 5373