Federal Reserve plans to prepare digital currencies report in Q3
CoinDesk reported that U.S. Federal Reserve Chairman Jerome Powell said on Wednesday his agency plans to release a report exploring central bank digital currencies (CBDCs), stablecoins and wholesale cryptocurrencies in September.
The Federal Reserve said CBDC “is an umbrella term for a third version of currency which could use an electronic record or digital token to represent the digital form of a country’s currency” which would be managed by the central bank and “could be used for various purposes by individuals, businesses and financial institutions.
Most cryptocurrencies are similar to stocks in that their value can change drastically depending on the vagaries of the market. The price of Bitcoin hit an all-time high in April, for example, because the Coinbase trading platform was preparing to go public. Then its value was halved after China decided to shut down cryptocurrency miners.
Stablecoins attempt to avoid this problem by connecting their value to another asset. CBDC actually do the same, but instead of being issued by a private organization, they’re managed by a government’s central banking system – that’s exactly why the Federal Reserve is looking at both.
“I think the problem is that stablecoins look a lot like money market funds or bank deposits or a narrow bank,” Powell told the US House Committee on Financial Services, according to CoinDesk. He also said that “you wouldn’t need stablecoins” if “you had an American digital currency” that could perform a similar function.
The Federal Reserve’s Boston branch told CoinDesk that it was still on track to release the report in question in the third quarter of 2021. Meanwhile, the World Bank, Bank for International Settlements and Monetary Fund international have all published a report in favor of CBDCs to G20 July 9.