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Federal Reserve Chairman: U.S. is “Working Hard” on Digital Currency

A few years ago, a government or central bank launching its own digital currency was a foreign concept. But since Facebook and a swath of partners unveiled the Libra cryptocurrency project in June 2019, those in power have sprung into action, looking into ways it could combat the rise of corporate currencies meant for an international audience.

Thus far, China has led the national digital currency race, with reports indicating the country is on the verge of rolling out a digital version of the yuan to millions in the near future.

But,  it seems that the U.S. (likely feeling threatened by China) is joining the race, with the Federal Reserve chairman, Jerome Powell, admitting in a meeting on the Hill that the launch of Libra has lit a proverbial fire under the government’s behind to start working on digital currency:

Libra lit a fire and it was a bit of a wakeup call that this was coming fast, and could come in a way that is quite widespread and systemically important.

Federal Reserve Chairman Confirms Digital Currency Efforts

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In Tuesday’s meeting of the House of Representatives Committee on Financial Services, Powell said that the central bank for America has started to really get to work on digital currency efforts:

We’re working hard on it, we have a lot of projects going on, lot of efforts going on on that right now.

The Federal Reserve leader did admit that there remain issues around the deployment of a digital currency, “including issues of, cyber issues, privacy issues, [and] many many operational alternatives,” though admitted that the launch of Libra has pushed forward the timeline on digital currency for the central bank.

Not Only Digital Dollar Supporter

Powell isn’t the only one in high places, so to say, supporting a digital dollar.

Per previous reports from Blockonomi,  former chairman of the Commodity Futures Exchange Commission (CFTC), Christopher Giancarlo, just created the so-called Digital Dollar Foundation.

This new organization, the report claims, is effectively a think-tank that will focus on the turning of the dollar into a digital asset based on blockchain or a blockchain-like technology.

Another former CFTC official, Daniel Gorfine, a private equity company, and information technology giant Accenture are supporting the project.

There’s also lawmakers  U.S. Representative Bill Foster (D-Illinois) and U.S. Rep. French Hill (R-Arkansas), who in October sent a letter to the chairman of the Federal Reserve about digital money. In it, they wrote:

With the potential for digital currencies to further take on the characteristics and utility of paper money, it may become increasingly imperative that the Federal Reserve take up the project of developing a U.S. dollar digital currency.

They added that should the U.S. drop the ball in this field, the unparalleled primacy of the USD in the global economy could begin to falter.

Strong 180° From Prior Stance

Powell’s comments on digital currencies are actually quite a reversal from his contemporaries’ previous position on digital currency.

In a December meeting of the House of Representative’s Financial Services Committee regarding the topic of America’s financial stability, Treasury Secretary Steven Mnuchin said that the U.S. is unlikely in need of its own digital currency in the near future:

[Fed Chairman] Powell and I have discussed this at length: we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency.

Federal Reserve 

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Currency

Bank of Japan Deputy Governor Amamiya: Cheaper CBDCs could stifle private sector innovation

  • BoJ deputy governor foresees CBDCs affecting countries’ financial intermediation due to a shift in funds.
  • Central banks have to learn the pros and cons of CBDCs and seek ways to mitigate the risks.

The deputy governor of the Bank of Japan (BoJ) Amamiya in recent remarks says that central banks are bound to remain lenders of some kind even at the time when digital currencies are issued. Therefore, there is a need to carry out a monetary policy through the control of digital money flows.

Amamiya believes that central banks considering issuing their own digital currencies around the world should “conduct a comprehensive study on how it affects the country’s settlement and financial systems.” The deputy governor also warned against issuing cheaper central bank digital currencies (CBDCs), which is likely to stifle innovation in the private sector.

Moreover, if we reach a point where households and businesses start to prefer CBDCs over bank deposits then that could affect countries’ financial intermediation through shift in funds. Lastly, Amamiya said that central banks must seek to learn the pros and cons of CBDCs and explore ways on how to mitigate the risks

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No Cigar: Coronavirus Outbreak Forces China to Delay Digital Currency Plans

Despite the efforts to contain the coronavirus outbreak of COVID-19, the epidemic continues to cross the globe, with many other countries reporting relatively substantial spreads of the virus.

In South Korea, for instance, the number of cases has reached 1,600, from the sub-100 count seen just a week ago, and in Italy, too, the coronavirus is rapidly spreading.

Understandably, this has started to affect many facets of the world’s economy and daily living — Bloomberg reported that the count of visitors arriving in Hong Kong is down over 90%, companies like Apple and Samsung have started to see the outbreak affect their business, and many across the world have been forced to stay home from work and school amid the unrest.

The damaging effects of the outbreak were accentuated on Tuesday, when a Chinese state-run media outlet confirmed that the coronavirus has hampered the development of the People’s Bank of China’s (PBOC) digital currency plans.

Chinese Media: Digital Currency On Hold as Coronavirus Spreads

If you’ve followed the crypto news cycle over the past few months, you’ve likely seen the near-incessant stream of reports that China’s central bank, the PBOC, is on the verge of launching its own digital currency, branded the “DCEP” by reports from local media.

In fact, a December report from Caijing, which cited individuals familiar with the PBOC’s operations, suggested that the central bank was going to roll out a pilot program for the national crypto asset at the start of 2020 in Shenzhen and another municipality.

Despite other reports corroborating the idea that the PBOC was done the base layer development of their digital yuan, nothing came of the Caijing report and others like it. The reason: coronavirus.

According to a recent report from The Global Times — an English news outlet closely affiliated with the Chinese Communist Party’s de-facto media mouthpiece, The People’s Daily — “sources close to the matter” say “China’s research into its sovereign digital currency has been delayed from the first quarter due to the outbreak of the coronavirus.”

The source elaborated that the outbreak has forced staff of the PBOC and of other government institutions to stay home and avoid certain activities, “which weighs on the development process.”

This was further confirmed by Shentu Qingchun, CEO of Shenzhen-based blockchain company BankLedger, a company that The Global Times claims is involved in the launch of DCEP. Shentu purportedly said while the PBOC intended to make an announcement regarding the digital currency in Q1 2020, the chances the “announcement could be made on time are slim.”

Those interviewed by the outlet remain largely optimistic, however, affirming their support for the project and suggesting that the launch of the digital currency is likely still on track to take place sometime this year.

Other Effects Are Being Felt

The coronavirus outbreak has been affecting the cryptocurrency and blockchain space in other ways.

Over the past few weeks, even as BTC’s price has shot higher from the $6,400 December bottom, the hash rate of the Bitcoin network has stagnated around 110 exahashes per second. While this metric is still nearly triple that seen one year ago, the stagnation began when the coronavirus began hitting mainstream media headlines in the West, around the start of January.

This suggests the coronavirus is slowing the efforts of Bitcoin miners to expand their operations; indeed, as explained in a previous Blockonomi report, Jiang Zhuoer of BTC.Top revealed that the police had shut down his mine due to the coronavirus.

Also, crypto conferences have been delayed, as have conferences in the traditional tech world. Most notably, Token2049 — a Hong Kong conference that this writer intended on attending this March — was pushed until October.

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Bank of Japan Deputy Governor Amamiya: Cheaper CBDCs could stifle private sector innovation

  • BoJ deputy governor foresees CBDCs affecting countries’ financial intermediation due to a shift in funds.
  • Central banks have to learn the pros and cons of CBDCs and seek ways to mitigate the risks.

The deputy governor of the Bank of Japan (BoJ) Amamiya in recent remarks says that central banks are bound to remain lenders of some kind even at the time when digital currencies are issued. Therefore, there is a need to carry out a monetary policy through the control of digital money flows.

Amamiya believes that central banks considering issuing their own digital currencies around the world should “conduct a comprehensive study on how it affects the country’s settlement and financial systems.” The deputy governor also warned against issuing cheaper central bank digital currencies (CBDCs), which is likely to stifle innovation in the private sector.

Moreover, if we reach a point where households and businesses start to prefer CBDCs over bank deposits then that could affect countries’ financial intermediation through shift in funds. Lastly, Amamiya said that central banks must seek to learn the pros and cons of CBDCs and explore ways on how to mitigate the risks.

News:source

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