WASHINGTON - Federal Reserve Chairman Jerome Powell has pointed out the risks of cryptocurrencies and set a clear timetable for the central bank to consider adopting its own digital currency.
Powell said cryptocurrencies, staple coins and other inventions could “carry potential risks to those users and the financial system in general.”
As that technology progresses, “our focus is also on the appropriate regulatory and oversight framework. This includes focusing on private sector payment innovators who do not currently fall within the traditional regulatory rules applied to banks, companies, investment and other financial intermediaries.”
Powell said the central bank will publish a discussion paper this summer on “establishing the digital currency of the central bank, with a particular focus on the benefits and risks that will illustrate our current thinking on digital payments.” The central bank will seek public opinion as part of this process.
He noted that the central bank wants to ensure that any central bank digital currency benefits consumers and businesses, adding that “to date, cryptocurrencies have not operated as a convenient means of payment, among other factors, differences in value”.
Powell’s statement came after the Treasury Department proposed new regulations on the use of bitcoin.
The release of the document, published on the central bank’s website, came in the middle of a week in which cryptocurrency values plummeted.
In addition, the role of digital currencies in ransomware payments was highlighted in the closure of a major gas pipeline in the country.
The Boston Fed is currently collaborating with the Massachusetts Institute of Technology to research technology that could be used for central bank digital currency and publish those findings in the third quarter.
Powell and other federal officials, however, have said they want to act deliberately to ensure that the benefits outweigh the risks involved.
We recommend: You can pay on eBay with cryptocurrencies soon
Courses and exercises to learn about cryptocurrencies and blockchain
The risk of acquiring cryptocurrencies is their high volatility
* J.M.
