The United States Federal Reserve has published a note related to a recent conference, saying that most experts believed that a US central bank digital currency (CBDC) would have zero impact on the global currency sector.
The conference was filled with talks about the role that a US CBDC would play, the role of stablecoins in the sector, and the future of the US dollar as a global reserve currency.
Federal Reserve discusses cryptocurrencies and CBDCs
The panelists in the conference said that in the case of a CBDC created outside the US, the status of the US dollar would not be threatened. Amid China’s advancement in developing a digital yuan, there were concerns that China’s CBDC would replace the USD as a reserve currency.
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The panelists also discussed digital assets and whether developing a CBDC would benefit the US dollar. The panelists also said that the underlying technology would not have a major impact on the global currency system.
The experts noted that there were external factors that determined the currencies used as reserve assets, including the market structure and political stability. Moreover, the countries that were steps ahead in launching their own CBDCs did not threaten the global status of the US dollar, as they were more focused on supporting their domestic retail market.
Experts say crypto can reinforce the status of the US dollar
The experts noted that while crypto adoption was increasing, institutional investors failed to invest heavily in these assets because of the lack of a clear regulatory framework. This left the crypto space being largely dominated by retail traders.
Despite the growing adoption of cryptocurrencies, the panelists noted that crypto-assets did not pose a threat to the US dollar in the short term. Some suggestions even stated that crypto could prop up the dollar if there is a rise in services built around assets linked to the dollar, such as stablecoins.
The views shared in this conference could change how the Federal Reserve regards cryptocurrencies. Last month, the Board of Governors at the Federal Reserve said that stablecoins that lacked proper regulations and enough backing posed a risk to the financial system. The remarks could have been triggered by the collapse of the TerraUSD (UST) stablecoin. The Federal Reserve Chair, Jerome Powell, has also previously expressed concern over stablecoins.
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