The government appears to be getting ready to make a move in the digital currency arena.For the first time ever, Federal Reserve chairman Jay Powell has issued a stand-alone video statement. The topic of the unprecedented video is digital currencies.
The effective functioning of our economy requires that people have faith and confidencenot only in the dollar, but also in the payment networks, banks, and other payment serviceproviders that allow money to flow on a daily basis...Recently, the rise of distributed ledger technology, which offers a new approach torecording ownership of assets, has allowed for the creation of a range of new financial products and services—including cryptocurrencies. To date, cryptocurrencies have not served as aconvenient way to make payments, given, among other factors, their swings in value.Nonetheless, coins tied to the value of the dollar or another currency—known as “stablecoins”—have emerged as a new way to make payments. These stablecoins aim to use new technologies in a way that has the potential to enhance payments efficiency, speed up settlement flows, and reduce end-user costs—but they may also carry potential risks to those users and to the broader financial system...echnological advances also offer new possibilities to central banks—including the Fed.In particular, technology now enables the development and issuance of central bank digitalcurrencies, or CBDCs. A CBDC is a new type of central bank liability issued in digitalform. While various structures and technologies might be used, a CBDC could be designed for use by the general public.For the past several years, the Federal Reserve has been exploring the potential benefitsand risks of CBDCs from a variety of angles, including through technological research andexperimentation...To help stimulate broad conversation, the Federal Reserve Board will issue a discussionpaper this summer outlining our current thinking on digital payments, with a particular focus on the benefits and risks associated with CBDC in the U.S. context. As part of this process, we will ask for public comment on issues related to payments, financial inclusion, data privacy, and information security.
We are committed at the Federal Reserve to hearing a wide range of voices on thisimportant issue before making any decision on whether and how to move forward with a U.S. CBDC, taking account of the broader risks and opportunities it could offer. The paper represents the beginning of what will be a thoughtful and deliberative process. Irrespective of the conclusion we ultimately reach, we expect to play a leading role in developing international standards for CBDCs, engaging actively with central banks in other jurisdictions as well as regulators and supervisors here in the United States throughout that process.
The Federal Reserve remains committed to ensuring that the public has access to a safe,reliable, and secure payments system. Our forthcoming paper on the evolution of digitalpayments is intended—along with our other work as a supervisor, regulator, and payment system operator—to advance the objective of ensuring that the payments system and the economy work for all Americans. We look forward to hearing your thoughts on this important topic.
Bottom line: The Federal Reserve is making its first step to neuter the usefulness of private cryptocurrencies and introduce a central bank digital currency.
There is just no way the Fed is going to allow any currency to emerge, digital or otherwise, that will take control of the money supply away from the hands of the Fed.
Powell's unprecedented video is evidence enough of this.
Below is the full Powell video5 minutes and 39 seconds).