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According to Treasury Secretary Steven Mnuchin, the U.S. government sees no use of diving into cryptocurrency anytime soon.
Mnuchin was speaking at the House Financial Services Committee in Washington. The decision to not creating a national digital currency comes after a discussion with Jerome Powell, Chairman of the Federal Reserve. The conversation happened on Thursday while the two of them were having their weekly meeting.
“Chair Powell and I have discussed this — we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency.”
Steven Mnuchin’s comment came after he was asked about Facebook’s cryptocurrency Libra and China’s decision to make its own digital currency. Even though Facebook has defended its forthcoming cryptocurrency by saying that it will open up new financial avenues for the marginalized and unprivileged around the world, lawmakers have raised concerns over the use of cryptocurrency to fund terrorist activities and other crimes.
Mnuchin, however, commented how he has no issues with Libra if the cryptocurrency follows proper rules and regulations. “I’m fine if Facebook wants to create a digital currency, but they need to be fully compliant.”
He said that it is important for Libra to follow the Bank Secrecy Act, which is also known as anti-money laundering act. To make sure that Libra follows the proper guidelines of the BSL, the Treasury Secretary has been holding “dozens” of meeting with Facebook. This has even led to a delay in development of Libra.
Evaluating National Cryptocurrency, But No Plans to Develop It Yet
Jerome Powell, on the other hand said that the Fed has been working on evaluating possible benefits of introducing a national cryptocurrency but has not yet identifies anything that would push the government towards developing it. Powell wrote in a letter to Representative French Hill: “We are carefully monitoring the activities of other central banks to identify potential benefits that may be relevant in the U.S. context.”
Instead of developing a digital dollar, the central bank is interested in developing a payment and settlement system that can operate 24/7 and in real-time. The system is expected to be developed by 2023 or 2024. During the hearing, Mnuchin lauded the system as being “very sophisticated.”
Banks around the world are currently looking at developing digital currencies e.g People’s Bank of China and even the European Central Bank. The crypto news of U.S refusing to follow suit can be considered “conservative” rather than effective, as assumed by the lawmakers.