US and Europe Accelerate Digital Currency Adoption, Confident in Winning Cryptocurrency Competition

Fed Chair Powell Announces Digital Dollar Report in September
"No Need for Cryptocurrency," He Asserts
ECB Plans Digital Euro Concept
Two Years of Preliminary Work Scheduled

Jerome Powell, Chair of the U.S. Federal Reserve (Fed)
[Photo by Reuters]

[Asia Economy New York=Correspondent Baek Jong-min, Reporter Kim Su-hwan] The central banks of the United States and Europe are intensifying their efforts to issue digital currencies (CBDCs). Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), expressed confidence that the digital dollar will prevail in competition with cryptocurrencies.

On the 14th (local time), Chairman Powell appeared before Congress and announced that a report on the issuance of the digital dollar would be released by September.

Powell had previously indicated that the report would be published in July, but the schedule was somewhat delayed. The Fed is researching the digital dollar primarily through the Boston Federal Reserve Bank. It was revealed that Powell met with Brian Armstrong, CEO of the U.S. cryptocurrency exchange Coinbase, last May, sparking speculation that the meeting was related to the introduction of the digital dollar.

Powell said the upcoming report would include discussions among Fed members regarding the introduction of the digital dollar and predicted it would be a significant milestone for its issuance.

[Image source=Reuters Yonhap News]

Opinions within the Fed are divided on the introduction of the digital dollar.

Fed Vice Chairman Randal Quarles recently expressed concerns, stating, "The potential benefits of the digital dollar are unclear, but it could pose significant and specific risks." Thomas Marvin, President of the Richmond Federal Reserve Bank, also opposes the digital dollar. A major foreign media outlet predicted that fierce debates over the digital dollar could erupt within the Fed.

Powell assured that the introduction of the digital dollar would not affect the dollar's status.

He said, "Even if other countries like China develop CBDCs, the dollar's status as the world's primary reserve currency will not be threatened." Regarding competition with cryptocurrencies, he predicted, "Once the digital dollar is introduced, stablecoins or cryptocurrencies will no longer be necessary."

Powell noted that stablecoins pegged to the dollar's value could continue to attract attention, arguing, "Stablecoins should be treated like bank deposits or money market funds (MMFs) and be subject to stronger regulation."

[Image source=Reuters Yonhap News]

Europe is also accelerating the introduction of the digital euro. The European Central Bank (ECB) Governing Council announced that it will conduct preliminary work related to the conceptual design of the digital euro over the next two years.

The digital euro is expected to take the form of a digital wallet where citizens of the Eurozone (19 countries using the euro) can store digital currency equivalent to cash and coins directly with the ECB rather than commercial banks.

Christine Lagarde, President of the ECB, said, "It has been nine months since we published the report on the digital euro. During this time, we have conducted research in collaboration with citizens and experts. As a result, we have decided to launch the digital euro project."

She added, "Our goal is to ensure that citizens and businesses can continue to access central bank money, the safest form of currency, in the digital age."

Previously, President Lagarde had warned about the potential use of cryptocurrencies for illegal transactions and expressed a negative view of Bitcoin. Analysts interpret the official move to introduce the digital euro as an alternative, providing a safe and centrally supervised payment method.

Christine Lagarde ECB President
Photo by Reuters Yonhap News

Fabio Panetta, ECB Executive Board Member, stated, "We are increasingly purchasing more things digitally and online," diagnosing that "the role of cash as a means of payment is declining."

He also emphasized, "Central banks cannot ignore this progress. As a public good, the supply of currency is a primary mission of central banks, and they must be bold to keep pace with the speed of change."

The ECB estimates that it will take at least four years to complete the introduction of the digital euro.

This content was produced with the assistance of AI translation services.