In recent weeks, there has been growing talk among influential U.S. figures concerning the prospects of “digitizing” the dollar via blockchain technology.
Yet there are two major American officials who have once again said they are decidedly skeptical of a digital dollar any time soon: Secretary of the Treasury Steven Mnuchin and Federal Reserve Chairman Jerome Powell.
That’s per comments made this week to the U.S. Congress by Sec. Mnuchin, who testified on Thursday before the House of Representative’s Financial Services Committee regarding the topic of America’s financial stability. Therein, Mnuchin — President Trump’s foremost economic adviser — said he and Chairman Powell, the current head of the U.S. central banking system, were of the same opinion that a Fed-backed blockchain dollar wasn’t near.
Don’t Expect a Government U.S. Stablecoin Soon
“[Fed Chairman] Powell and I have discussed this at length: we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency,” Mnuchin said.
It’s not exactly a surprising position. This year, Sec. Mnuchin has made it clear that he’s generally skeptical toward the cryptocurrency space. Back in July, Mnuchin declared “I can assure you I will personally not be loaded up on bitcoin.” Around the same time, he said U.S. regulatory agencies were coordinating on cryptocurrencies to foster a “unified approach.”
Moreover, Sec. Mnuchin’s latest digital dollar comments come on the heels of the U.S. Treasury releasing its “2019 Annual Report,” wherein his department concluded that stablecoins could have major impacts on America’s economy if they were ever to become “widely adopted as a means of payment.”
For his part, Fed Chairman Powell told Congress last month that the Fed was considering a central bank digital currency but had yet to actively start developing one:
“[T]he Federal Reserve is not currently developing a U.S. dollar central bank digital currency … but continues to carefully evaluate the costs and benefits of issuing a general purpose CBDC, defined as a new type of Federal Reserve liability that could be held directly by households or businesses,” Powell said.
Notably, the chatter comes after former U.S. Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo argued in October that America should transition the dollar onto blockchain technology. Just this week, Giancarlo joined the Willkie Farr & Gallagher law firm, where he said he would continue working to back a digital dollar.
Mnuchin Down With Libra, If It Follows the Rules
In his aforementioned congressional hearing, Sec. Mnuchin also touched on Facebook’s Libra stablecoin project, which has caught the ire of regulators around the world since June.
While financial authorities in France and Germany have said they intend to block the Libra altogether from coming to Europe, Sec. Mnuchin told the House Financial Services Committee that he would be agreeable to Libra moving forward in the U.S. so long as its backers followed all of the required finance laws.
“I’m fine if Facebook wants to get into digital payments … and that may be good for their customer base and good for a lot of Americans who don’t have access to banks … we want to make sure if they do it they’re doing it in a way that is fully compliant,” Mnuchin said.
The Race Is On
American may not be close to releasing a digital dollar, though other countries are nearing their own digital currencies.
This week, the Bank of France said it would undertake trials around a digital euro in 2020. That announcement is only the latest of its kind, as nations like China and Turkey are already well along in rapidly developing their own digital currencies.
If the U.S. waits much longer, it’ll left behind in the dust where digital money is concerned.
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