June 24, 2021

The Chinese CBDC Would Not Work in the US, Said Fed Chair Jerome Powell

2 min read

The Chairman of the Federal Reserve detailed that the United States will not rush its own digital currency project regardless of China’s fast developments. He revealed that the CBDC method undertaken by the Asian country will not be effective in the USA.

China’s CBDC Won’t Work in the US

With the rapidly broadening topic of reserve bank digital currencies (CBDCs) in many nations, the world’s biggest economy is yet to supply a conclusive stance. Although the United States dollar remains the leading reserve currency, the nation’s position might be challenged if it falls back.

Nevertheless, Federal Reserve’s Chair, Jerome Powell, described as soon as again that the US can not afford to hurry the job. Moreover, he doubled down on a previous assertion showing that the country has a duty to “do it best” instead of doing “it quick.”

In Addition, Jerome Powell kept in mind that the Chinese model of digitizing its yuan will not work properly in the United States as the 2 nations are very different and need distinct approaches:

“The currency that is being utilized in China is not the one that would work here. It’s one that really allows the government to see every payment for which it is used in genuine time.”

Powell also informed that the US reserve bank remains in a stand-by position regarding a possible CBDC. In his words, the institution requires to get knowledgeable about the innovation behind the job. The end-product should be understandable for United States citizens and also for individuals in other countries counting on the dollar.

Jerome Powell
Jerome Powell Source: BBC China’s Stage of Launching CBDC While the US keeps stalling, China is currently running pilot programs to analyze the digital yuan. More recent reports even suggested that the world’s second-largest economy prepares to allow athletes and travelers from abroad to utilize the Chinese digital currency during the 2022 Beijing Winter Olympics.

Regardless of China’s advancement into the digital currency world, some market authorities shared Jerome Powell’s opinion that the rush into the digital yuan might not supply the expected outcomes. Karl Schamotta, Chief Market Strategist at Cambridge Global Payments in Toronto, commented:

“You are taking a look at a currency that will essentially have no privacy and will be strictly under the control of the state.”