Members of Congress Ask the Fed to Consider Creating a U.S. Dollar Digital Currency
In a letter to Jerome Powell, Chairman of the Federal Reserve, two members of congress have requested the Federal Reserve to “take up the project of developing a U.S. dollar digital currency.”
In their statement to the Fed, Rep. French Hill and Rep. Bill Foster strongly believe that US Federal Reserve “has the ability and the natural role to develop a national digital currency.” The two Members of Congress also had this to say in their letter:
“We are concerned that the primacy of the U.S. Dollar could be in long-term jeopardy from wide adoption of digital fiat currencies. Internationally, the Bank for International Settlements conducted a study that found that over 40 countries around the world have currently developed or are looking into developing a digital currency. For example, Sweden is working on an “e-krona” project, Uruguay has completed a pilot program on an “e-Peso” digital currency, and China’s central bank is expected to launch a digital version of the yuan later this year or in early 2020.”
The letter outlines that solely relying on the private sector to create cryptocurrencies has inherent risks including “loss of control of monetary policy.” For example, J.P. Morgan became America’s first bank to develop and pilot a cryptocurrency. Facebook’s Libra coin also has serious implications on the country’s existing monetary system and “could remove important aspects of financial governance outside of U.S. jurisdiction.”
French Hill and Bill Foster are not the first people to request the Fed to look into a digital currency. In 2018, Sheila Bair, former Federal Deposit Insurance Corporation Chair, suggested that the country’s central bank should look into creating a U.S.-dollar digital currency as way to mitigate the risks of fintech disruption by other countries or the private sector.
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