Fed's Powell says digital currency is a 'complement' to the dollar, 'not a replacement'
Any central bank digital currency needs to exist alongside the US dollar, Powell said
Federal Reserve weighs in on future of digital currency
FOX Business' Edward Lawrence reports on Federal Reserve Chairman Jerome Powell's statements indicating the Fed is taking the first step to potentially issue a U.S. digital currency.
Federal Reserve Chairman Jerome Powell said the U.S. central bank will release a research paper this summer on developing digital currency.
"We are committed at the Federal Reserve to hearing a wide range of voices on this important issue before making any decision on whether and how to move forward with a U.S. CBDC," he said in a video statement Thursday on central bank digital currencies.
Powell said the Fed wants to play a "leading role" in the development of international standards as central banks around the world – most prominently China – make moves in the digital currency realm. China's creation of its own digital currency, a first for a major economy, has raised concerns among some that it could undermine the strength of the greenback globally.
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While he highlighted the possible benefits of cryptocurrencies and "stablecoins", Powell warned they "may also carry potential risks to those users and to the broader financial system.
Any creation of a central bank digital currency in the U.S., he said, would require "careful thought and analysis," underscoring the need to integrate it into existing payment systems alongside the U.S. dollar.
"Our key focus is on whether and how a CBDC could improve on an already safe, effective, dynamic, and efficient U.S. domestic payments system," Powell said. "We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks."
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Powell’s statement came just hours after the Treasury Department proposed new regulations on bitcoin, requiring any transfer worth $10,000 or more to be reported to the Internal Revenue Service in part of a broader effort to crack down on tax cheats.
"Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion," the Treasury said in a news release.