Federal Reserve Chairman Jerome Powell is holding a press conference following the two-day meeting of the Federal Reserve’s Federal Open Market Committee in Washington on July 31, 2019.
Sarah Silbiger | Reuters
Federal Reserve Chairman Jerome Powell said Monday that cryptocurrencies remain an unstable reserve of value and that the central bank is in no hurry to introduce a competitor.
“They are highly volatile and therefore not a really useful value and are not supported by anything,” Powell said during a virtual roundtable on digital banking hosted by the Bank for International Settlements. “It’s more of a speculative asset that’s essentially a substitute for gold instead of the dollar.”
Powell spoke one day when Bitcoin fell to Coinbase, but was still trading at about $ 57,000 per piece. The cryptocurrency has risen in price over the past seven months amid intense business activity and growing acceptance in the financial industry.
In recent years, the Fed has worked on its own payment system that facilitates the fastest transfer of money, with the possibility of the final product being released over the next two years.
Along with this, the Federal Reserve has also undertaken other research on whether a central bank digital currency would be necessary or practical.
On the latter issue, Powell said the Fed takes the time before moving on to anything.
“To move forward on this, we would need the participation of Congress, the administration, broad elements of citizenship, and we haven’t really started the work of this public engagement,” he said. “Therefore, you can expect us to move forward with great care and transparency with regard to the development of a digital currency of the central bank.”
The Boston Fed last year initiated a partnership with the Massachusetts Institute of Technology in a multi-year study on the development of a central bank digital currency. The work is expected to last two to three years and, even then, focus more on the hypotheses of a central bank-sponsored cryptocurrency rather than imminent implementation.
Powell said Congress would probably have to pass some sort of enabling legislation before the Fed could proceed with its own currency.
He noted, however, that the Covid-19 pandemic stressed the importance of developing better payment systems so that money can reach those in need quickly.
“He highlighted in a whole host of things the disparate impact of so many things on poor, low- and moderate-income communities,” Powell said.