August 5, 2021

The Rise of Crypto Poses Important Questions for Central Banks: NY Fed President

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New York Federal Reserve Bank President – – John Williams – opined that the quick development of virtual assets challenges the central banks’ desire to introduce their own CBDCs. He advised policymakers to consider how cryptocurrencies would work efficiently alongside physical cash.

Crypto Raises Questions for Central Banks

John Williams – – the president and CEO of the Federal Reserve Bank of New York – – responded to the recent presentation of the previous Bank of England governor Mark Carney who prompted central banks to analyze digital assets.

The top executive thinks that reserve banks and the Federal Reserve, in specific, must not leave unanswered questions about blockchain technology and its guideline if they want to provide their own CBDCs:

“Before central banks like the Federal Reserve can issue their own CBDC, a number of significant concerns referring to blockchain innovation and regulation need to be attended to.”

Williams asserted that digital possessions need to be carried out effectively in the financial world together with physical cash. Nations’ officials should work towards that goal and adjust the correct guidelines.

The 59-year-old financial expert John Williams is the 11th president of the Federal Reserve Bank of New York. Previously, he had the same function however on the West Coast as he was in charge of the Federal Reserve Bank of San Fransisco from 2011 to 2018. Additionally, Williams is presently working as vice-chairman of the Federal Open Market Committee.

John Williams. Source: Bloomberg
John Williams. Source: Bloomberg The United States Should Be Cautious With its CBDC

Last year, the Fed Chair – – Jerome Powell – suggested that the United States need to not strive to be the first country to introduce its own central bank digital currency but to focus on releasing it the right way:

“The United States is dedicated to thoroughly and attentively assessing the prospective expenses and advantages of a CBDC for the United States economy and payments system.”

Back then, he confessed that digital currencies have the possible to improve the present payments system. However, the Federal Reserve hadn’t made a final decision on introducing its own.

On another celebration this year, Powell shared his perspective on bitcoin. He surmised that the main cryptocurrency stays a speculative type of financial investment that will not change the United States dollar due to its boosted volatility. On the other hand, it has the chance to do so with gold.

Featured Image Courtesy of FT