According to John Williams, President of the Federal Reserve Bank of New York, the rapid development of digital currencies is challenging the desire of central banks to launch their own central bank digital currencies.
Williams also advised policy makers to consider how cryptocurrencies can operate efficiently in tandem with physical cash.
Crypto poses questions to central banks:
John Williams responded to former Bank of England Governor Mark Carney’s recent presentation urging central banks to examine digital assets.
Williams believes that central banks and the Federal Reserve, in particular, should not leave unanswered questions about blockchain technology and regulation if they are willing to issue their own digital currencies:
Before central banks like the Federal Reserve can issue digital currencies to their central banks, several key questions regarding blockchain technology and regulation must be addressed.
Williams emphasized that digital assets must be successfully implemented in the financial world along with physical cash.
He told that state officials should work towards this goal and amend appropriate regulations.
59-year-old economist John Williams is the 11th president of the Federal Reserve Bank of New York.
Previously, he had the same role but on the West Coast where he was in charge of the Federal Reserve Bank of San Francisco from 2011 to 2018.
In addition, Williams is currently the Vice Chair of the Federal Open Market Committee.
The United States should be careful with its digital currency:
Last year, Federal Reserve Chairman Jerome Powell stated that the United States should not strive to be the first country to launch its own central bank digital currency, but rather focus on issuing it in the right way, as his statement at the time stated that:
The United States is committed to making a careful and thoughtful assessment of the potential costs and benefits of central bank digital currencies for the United States economy and the payments system.
At the time, he admitted that cryptocurrencies have the potential to improve the current payments system.
However, the Fed has not made a final decision on releasing its own.
On another occasion this year, Powell shared his view on Bitcoin, predicting that the primary cryptocurrency remains a speculative form of investment that will not replace the US dollar due to its increased volatility, and on the other hand, he said that Bitcoin has an opportunity to play the role of gold.