Two representatives – French Hill (R-Arkansas) and Rep. Foster (D-Illinois), have asked the Federal Reserve, the country’s most significant financial institution, to bear in mind developing a digital dollar. Hill and Foster stated in a letter written to Federal Reserve Chairman Jerome Powell on Monday, that the “nature of money is changing,” and Federal has the capability and the right to create and manage U.S. currency policy. They have got a mandate to provide the country with a more secure, extra solid, more flexible economic and financial systems.
While Digital currencies represent the future of money and global finance, it has become assertive that the Federal reserve should take up the task of exploring a U.S dollar digital currency.
Concerns that the U.S. dollar could be in “long-term jeopardy” from the wide adoption of virtual fiat currencies are bought forward by the congressmen. He further mentions a study from the Bank for International Settlements (BIS), where we see that over forty countries have already or maybe looking to explore digital currency. For instance, China’s central bank, is anticipated to release a virtual model of the yuan later this year or in early 2020, Sweden is working on an ‘e-krona' launch, a pilot program on an ‘e-Peso' digital currency is completed by Uruguay.
A Federal Reserve representative said that the suggestion to lessen the dominance of the U.S dollar in want of virtual currency is wildly unreasonable.
“I see no argument that makes sense to have something that complicated out there when you have large, liquid capital markets in the U.S. Not having one currency that you can basically price things and have a deep market in, that makes life much harder for the global economy’’.
Hill and Foster also make a mention of the Facebook-led Libra stablecoin project, as a solution to the financial problems. He states that people need to realize the efforts Facebook attempts with Libra, besides the projects downsides. The U.S. should not rely on private companies to develop digital currencies, read the letter further.
As per the letter demands, Hill and Foster are, therefore, looking for answers on a number of questions asked by the Fed inclusive of whether or not the Fed is presently exploring the development of its digital currency and whether or not there are any plans if their private equivalents benefit traction. What benefits the Fed incurs as it relates to developing a digital currency, what are the risks in doing so?