Bill Foster, a Democratic Congressman from Illinois, recently asked Jerome H. Powell, the Federal Reserve Chair, some questions about the progress of the United States’ CBDC, or central bank digital currency.
Foster Wants A Digital Dollar
In Foster’s line of questioning with Powell, he asked him if he thought the establishment of a digital dollar would guarantee that the United States dollar would still serve as the core of the country and the world’s economic system.
Powell believes the dollar is still essential to the financial system of the U.S. He thinks having one government currency as the epicenter of the financial system as a whole has served the United States well, and because it’s been such a basic thing, it’s never been questioned.
Regarding the CBDC, Powell was uncertain. He questions whether a digital currency would keep them on that path, as every central bank has been taking a close look at that.
Foster Urges the U.S. to Take Up CBDC Matter Right Away
The next question Foster asked Powell in comparison with current CBDC projects was Powell’s response to China. He asked Powell how he’d describe the United States’ ability to respond to this possible threat, as China could use its cellular payment system they established to scale its digital currency, the Yuan.
In response to this set of questions, Powell stated that China and the U.S. differ when it comes to dealing with centralized digital currency. “From an institutional context, they are entirely different,” he says.
Foster also expressed concerns regarding the Federal government’s inaction to react or come up with a digital currency plan. He worries that competition from other countries, including China, could gain an edge by rolling out CBDCs before the United States does. He specified China’s plan to establish its digital Yuan along with other countries that are part of their Belt and Road initiative, which could put the currency status of the dollar’s world reserve in jeopardy.