Posted 2 years ago | by @devadmin
The chairman of the Federal Reserve, Jerome Powell has proclaimed the Fed is open to collaboration with private companies in creating a possible digital dollar, Yahoo News reported.
“We will have lots of conversations with industry and stakeholder engagement, and that’ll help us in our work on digital currencies and cross-border payments,” Powell said in an International Monetary Fund panel.
Powell said private sector initiatives like Facebook’s Libra project have accelerated central banks’ interest in setting up their own digital currencies or CBDC (Central Bank Digital Currencies.)
But Powell cautioned that the Fed faces “difficult policy and operational questions,” such as the monetary policy implications of a digital dollar. Powell also listed illicit activity and cyber attacks as risks.
“I actually do think this is one of those issues where it’s more important for the United States to get it right than it is to be first,” Powell said.
The U.S. has found itself trailing behind other countries that have either planned or launched a digital version of their currency.
The Bank of Mexico last year launched a Cobro Digital (CoDi) system that allows users and merchants to transact in digital pesos using QR codes. The People’s Bank of China recently began user testing a digital renminbi, which would allow transactions even without connection to the internet.
Although, Powell said that the U.S. Fed wasn’t working on a digital dollar at this time. Sources and information indicate that’s not the full truthful picture.
In fact, earlier this year on June 30th, 2020, the Senate Banking Committee held a hearing on the future of a digital dollar, which means they are taking the digitization of the U.S. currency seriously.
Forbes reports some highlights from the hearing:
- Senator Tom Cotton (R-Ark.) stated, “The U.S. needs a digital dollar…The U.S. dollar has to keep earning that place in the global payments system. It has to be better than bitcoin … it has to be better than a digital yuan.”
- Chairman Mike Crapo (R-Idaho) expressed concerns of regulator oversight for stable-coins.
- Charles Cascarilla of Paxos testified advocating for stable-coins, stating that they address the “antiquated plumbing” of our financial system as well as financial inclusion. “Blockchain based stable-coins allow everyone access”.
- Nakita Cuttino, visiting assistant professor of law at Duke University, discussed the friction in the current payday cycle and the rising demand for costly advanced-payment apps which could be resolved with digital currencies. “In the absence of public policy addressing open access payments and real-time payments, low-income and moderate-income Americans will continue to have limited resources needed, whether by traditional fringe services like payday loans or some novel fringe service.”
- Former CFTC Chairman Chris Giancarlo and head of the Digital Dollar Project, emphasized the “social and national” benefits such as increased speed, lower costs and issues of financial inclusion. “Darwin said the most adaptable survive. And I think that is true when we transition to a new architecture. To adapt to it, will help bring benefits to the society at large.”
Like it or not, The Digital Dollar is being pushed through U.S. Congress. Cryptocurrency is being leveraged by big government to introduce a digital version of fiat money. China recently rolled out a test of its digital Yuan, and this effort was tested by numerous restaurants and retail establishments including popular Western restaurant chains like Starbucks, McDonald’s and Subway, Coindesk reported.
Although, China hasn’t fully rolled out the system, the test run is taking place in at least four cities in China: Shenzhen, Suzhou, Chengdu, and Xiong’an, according to China’s central bank which confirmed the test of its new digital Yuan officially called “Digital Currency Electronic Payment (DCEP)” to the Wall Street Journal.
A report today indicates that China’s test has so far failed according to Coindesk with users failing to be impressed by China’s digital Yuan.
China also launched its Blockchain Service Network (BSN) for domestic and global commercial use. Further China announced a 71-person committee for its Blockchain which includes executives from China’s central bank, as well as tech giants Baidu and Tencent, according to an announcement from the country’s Ministry of Industry and Information Technology (MIIT).
Now it’s the U.S’ turn. Just recently, Congresswomen Rashida Tlaib (D-Mich.) and Pramila Jayapal (D-Wash) introduced a new proposal to have the federal government issue $2,000 per month to citizens by minting a pair of $1 trillion coins. The piece of legislation is called the Automatic BOOST to Communities Act (ABC Act).
The ABC Act states Congress proposes Stimulus payments be distributed via pre-paid U.S. Debit Cards managed by the U.S. Treasury, meaning that ultimately the Treasury and fed will create a digital wallet.
This concept originally appeared in a draft discussion of the CARES Act, although ultimately was eliminated in the 3rd and final COVID-19 stimulus bill. The ABC Act seeks a resolution by 2021 for the Treasury to offer e-wallets in the form of digital dollar wallet accounts and the Federal Reserve to create FedAccounts of the digital currency.
The ABC Act and attempts by U.S. Speaker of the House Nancy Pelosi to sneak the creation of a digital currency through the CARES Act aren’t the only proposals. Another bill has surfaced in the Senate called the ‘Banking For All Act’, sponsored by the Ranking Member of the Senate Banking Committee, U.S. Senator Sherrod Brown (D-OH, Forbes reported.
The BFAC discusses the definition for digital dollars as well as for digital dollar wallets, and provides the provisions for a pass-through digital dollar wallet with the mandate for all member banks to open and maintain digital dollar wallets used for transferring Stimulus payments.
While the bills appear to be different, they actually work together. Under the BFAC, everyone would be allowed to set up a digital dollar wallet that would be called a ‘FedAccount,’ which would be a free bank account that can be used to receive money, make payments, and take out cash. FedAccounts would be available at local banks and Post Offices, and would have no account fees or minimum balance requirements. Account-holders would receive debit cards, online account access, automatic bill-pay, mobile banking, and ATM access at Post Offices.
It’s not just U.S. proposed bills, VISA recently applied for a digital dollar blockchain patent, which appears to be laying the groundwork for central banks to mint a U.S. based digital currency, Coin Desk reported.
China isn’t the only country to test a Central Bank Digital Currency (CBDC), a consortium of banks tested digital cash in 2016 in a Wall St test run, which didn’t get much fanfare. China is also not the only country developing a digital currency, the UK is developing one as well, CoinTelegraph reported. Besides the UK, the U.S., Russia, and India, to name a few countries, are also considering launching their own CBDC, or fiat cryptocurrency. BIS states that this future is now inevitable in a PDF from January of this year with compiled research of more than 50 Central Banks that were polled, entitled: “Impending arrival – a sequel to the survey on central bank digital currency.”
The poll indicates that as many as “80% are engaging in some sort of work with developing digital fiat currencies, while 40% have progressed from conceptual research to experiments, or proofs-of-concept; and another 10% have developed pilot projects.”
Brian Brooks, the former head of Coinbase’s legal department, was recently appointed head of the U.S. Office of the Comptroller of the Currency (OCC).
Brooks expressed in his first official acts, he considers the blockchain technology as a “game changer” and considers Bitcoin, Ether, and XRP in particular as problem solvers. So what is the OCC and why is this bullish for cryptocurrency as well as XRP? The OCC’s office is an independent office within the United States Department of the Treasury that serves to regulate and audit all national banks and savings banks as well as the federally licensed branches and agencies of foreign banks.
This means that Brooks now heads the federal authority responsible for the largest banks in the USA. As Brooks made clear in an interview with Forbes, he could shake up the US financial world and give the adoption of the blockchain an extraordinary boost. In the interview, Brooks promoted the blockchain technology as a potential “game changer” for the banking industry. He explained the potential of the blockchain and crypto as follows:
Blockchain has potential to connect up, in a decentralized network, all kinds of data. It has the ability to create large, friction-free, decentralized networks of people. There is huge and great promise in blockchain and crypto.
Brooks himself specifically referred to three cryptocurrencies as prime examples of the potential of blockchain and financial technology. Forbes noted: “Interestingly, he’s looking for decentralized networks in general — he cited Bitcoin, Ether and XRP in particular — to solve many of the problems hindering more than one-thousand financial institutions under his purview.”
Further, Brooks stated in his “regulation proposal” on June 2nd, that he advocates a revision of the existing regulations on “digital assets of banks”. In particular, Brooks also expressed concern about the ancient methods used by banks to transfer money.
“It takes three days if you’re trying to send money from the US to Europe… on the SWIFT network. Your money is at risk during that period. And even when the money is transmitted, foreign exchange fees are incurred. But a digital representation of value on both sides of the transaction can eliminate that friction and those costs,” Brooks wrote.
Reading this may sound very much like Ripple’s technology, however, that’s pure speculation assuming it. But wouldn’t be a shock if XRP was boosted in such a way due to his own comments mentioning XRP.
Although, there’s more information if we continue digging. So it turns out in May America’s Consumer Financial Protection Bureau gave Ripple approval for its use in cross-border money transfers.
According to a report recently published by America’s Consumer Financial, Protection Bureau has been researching new developments in the remittance market, including trends related to digital currencies.
U.S Consumer Financial Protection Bureau, which plays a major role in protecting America’s consumers in the financial sector, wrote on the “continued growth and expanding partnerships” of companies such as Ripple.
Like it or not, Congress and the financial sector are getting ready for a momentous push towards a digital cash era. This is now confirmed by Jerome Powell himself, despite saying that the Fed isn’t currently working on a digital dollar. Other parts of the government and private sector themselves are working on a digital dollar.
Watch Bitboy Crypto discuss Powell’s big statement in the video below!
Bitcoin is currently trading at [FIAT: $11,745] UP +2.5% according to Coingecko at the time of this report.