Federal Reserve chair Jerome Powell has been testifying on Capitol Hill this week, and it’s pretty clear that he is not a fan of digital coins – especially stablecoins.
During a two-day congressional hearing, the Fed chief said the main incentive for the U.S. to launch its own central bank digital currency, or CBDC, would be to eliminate the use case for crypto coins in America.
“You wouldn’t need stablecoins; you wouldn’t need cryptocurrencies, if you had a digital U.S. currency,” Powell said. “I think that’s one of the stronger arguments in its favor.”
Central bankers and U.S. lawmakers have for years bemoaned the rise of stablecoins, a specific subset of cryptocurrencies that have a value pegged to a real-world asset, such as a fiat currency like the U.S. dollar or a commodity like gold.
These nongovernmental digital tokens are increasingly being used in domestic and international transactions, which is scary for central banks because they don’t have a say in how this space is regulated.
“I understand why they fear stablecoins,” said Nic Carter, founding partner at Castle Island Ventures. “I can see why they’d be concerned with a large portion of commercial banking activity flipping over to this largely unregulated world.”
But Powell isn’t necessarily all that keen on the U.S. launching its own digital token either. There are already close to 11,000 cryptocurrencies, so a digital dollar would be entering a very crowded field.
In response to a question Thursday from Senator Pat Toomey, R-Pa., Powell