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With China being in the lead regarding its CBDC testing and development, a lot of countries are rushing their central bank digital coins to catch up. The US, on the other hand, has different plans. Federal Reserve chairman, Jerome Powell, says that it is more important to do it right than to be the first to issue a CBDC.
It is more important to do a CBDC right than to issue it first
The topic of central bank digital currencies (CBDCs) is still one of the hottest ones in the financial world. Countries like Japan are extremely worried about the advantage that China might get as a first mover.
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Meanwhile, according to the US Fed’s chairman, the US will not issue the digital dollar until its central bank resolves the questions, issues, and details tied to the CBDC.
Powell further claimed that he does not worry about any other country that might launch its own coin before the US. He said as much during the IMF’s panel on cross-border payments yesterday, October 19th.
He added that there is a great deal of work to be done regarding CBDCs, and that the US Fed has not made a decision to issue the digital dollar.
According to him, getting it right would mean that the US must look at potential rewards, but also possible risks. This is particularly important due to the USD being the world’s reserve currency.
The US does not see the need for a CBDC
Of course, every country has, and will have, its own reasons and motivations for issuing its own coin. However, when it comes to the US, the Fed is trying to determine if a CBDC could improve an ‘already safe and active dynamic domestic payment system.’
He claims that the US still sees rather strong demand for cash, with a mature financial and banking sectors, and a highly banked population. In other words, most people already have access to an electronic payment system.