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The president of the Federal Reserve Bank of Philadelphia, Patrick Harker, said on Wednesday that the U.S. shouldn’t be the first nation to launch its digital currency payment system and lead the pack of other central banks issuing state-sponsored cryptocurrency.
Harker further said that the trend of the central banks around the world planning to launch their own digital currencies has already started and it is inevitable that the Federal Reserve follows the same, but the U.S. does not need to be the first to get its hand on a digital currency developed by the nation’s top monetary authority.
“Frankly I don’t think we should be the first mover as a nation to do this,” Harker asserted, while speaking at a community banking conference regarding the important role that the U.S. dollar plays in the global currency market and the importance of testing out a digital currency payment system before implementing it.
When asked about the Fed’s decision to create its own real-time crypto payments system he commented that “It is inevitable … I think it is better for us to start getting our hands around it.”
With regard to the current Federal Reserve’s real-time payment and settlement services called ‘FedNow,’ Harker proclaimed, “I am looking at the next five years after that. What comes next? I do think it is something around digital currency.”
Currently, the U.S. Fed and other central banks have been deliberating on the right approach to deal with privately issued cryptocurrencies such as Bitcoin(BTC)trade and the forthcoming Facebook Libra, and also with the impact of distributed ledger technology (primarily blockchain) on the current banking system. However, things are still unclear when it comes to such cryptocurrencies.
Worries about Cryptocurrencies Taking Over
Several questions arise whether some kind of privately issued cryptocurrency will expand enough to become a global currency and comply with regulatory bodies around the world, and how these digital currencies can impact the current monetary sovereignty.
“We’re a long way from that,” Fed Chair Jerome Powell said in June, explaining the technology is still in its development phase. Other Fed officials found no obvious benefits and use cases of central banks issuing real-time crypto payment system and digital currency. That said, just recently two congressmen sent a letter to Powell, attempting to convince him to issue a national digital currency.
After Facebook’s announcement about the launch of the Libra cryptocurrency project, a number of financial experts raised concerns about it and praised the plan of national central banks issuing their own digital currency, including European Central Bank (ECB) board member Benoit Coeure.
Worrying about Facebook’s potential to reach out to billions of users across the world, central banks and institutions all over the globe, including even the Bank for International Settlements, have already started to think about the idea of national digital currencies as well.