Federal Reserve Chair Jerome Powell told Senate lawmakers on Jan. 11 that there's nothing standing in the way for privately issued stablecoins to co-exist alongside a potential Fed central bank digital currency (CBDC).
"If Congress were to authorize and the Fed were to pursue a central bank digital dollar ... is there anything about that that ought to preclude a well-regulated, privately issued stablecoins from co-existing with a central bank digital dollar?" Toomey asked.
"No, not at all," Powell replied, noting also that the Fed plans to release a report on CBDCs in the near future.
The Fed has not committed to launching a digital dollar, though it has been exploring the issue. Moves by multiple countries adapting their regulatory frameworks for crypto-assets and looking to roll out their central bank-issued digital currencies have prompted the Fed to ramp up its efforts in this space.
China’s central bank is pushing to become the first major monetary institution to issue a CBDC, part of its drive to internationalize the yuan and reduce dependence on the dollar-dominated global banking system.
John Mac Ghlionn, a researcher and Epoch Times contributor, argued in a recent op-ed that a digital dollar is needed to counter the Chinese Communist Party's (CCP) moves.
"As the United States is the only country capable of countering the CCP, a digital dollar is a must," Ghlionn wrote.
"A world dictated by Chinese leaders will benefit no one but the elites in Beijing," he continued. "Unless the United States launches a digital dollar in the near future, there is reason to fear that the Fourth Industrial Revolution will have all the hallmarks of a dystopian novel."
"The design of a CBDC would raise important monetary policy, financial stability, consumer protection, legal, and privacy considerations and will require careful thought and analysis—including input from the public and elected officials," he added.
The PWG recommended that Congress pass legislation that would guard against risks, including that stablecoin issuers be treated as depository institutions insured by the Federal Deposit Insurance Corporation (FDIC), and that custodial wallet providers should be subject to appropriate federal oversight.