The United States could be benefited in many ways if a central bank digital currency (CBDC) is created. This is according to Jerome Powell, the chairman of the U.S. Federal Reserve. He stated during a panel discussion that the payment system in the country could be certainly improved if a CBDC is implemented.
CBDCs Could Improve the U.S. Payment System
According to Mr. Powell, there are many different ways in which CBDCs could improve the way in which payments in the United States are processed. He has also mentioned that this is motivating them to understand and investigate the implementation of CBDCs.
It is worth mentioning that CBDCs would allow transactions to be processed faster and also in a cheaper way. Furthermore, implementing such a currency could also be very useful for the entire payment infrastructure to be modernized and improved, something that could also have a positive impact on society.
However, these positive comments on CBDCs do not mean the United States will see the implementation of a CBC in the near future. Indeed, this is something that will take a long time, investigation and testing. At the same time, Powell said that it will be important for the country to properly build a CBDC rather than having one as the first country.
On the matter, Powell said:
“I think it’s more important for the United States to get it right than it is to be first. Getting it right means that we not only look at the potential benefits of a CBDC but also the potential risks and also recognize the important trade-offs that have to be thought through carefully.”
There are other risks and challenges related to CBDCs that were addressed by Powell. These risks include cyberattacks and fraud, an impact on monetary policy and financial stability, and the balance between security and users’ privacy.
These are the main issues central banks all over the world are currently analyzing and debating before being able to launch a CBDC on their own. Some of the countries that have been analyzing the impact of CBDCs include Canada, the United Kingdom, Ukraine, Uruguay, Norway and many others.
It is worth taking into consideration that CBDCs would be used as a complement rather than as a replacement for cash in the United States. Other countries investigating the impact of CBDCs have similar views to Powell on how to handle their impact.