Jerome Powell, chairman of the Federal Reserve, is holding a two-day press conference following the two-day meeting of the Federal Open Market Committee in Washington on July 31, 2019.
Sarah Silbiger | Reuters
Federal Reserve Chairman Jerome Powell said Monday that cryptocurrencies remain an unstable repository and the central bank is in no hurry to introduce a competitor.
“They are extremely volatile and therefore not really useful for valuable stocks and are not supported by anything,” Powell said during a virtual discussion on digital banking hosted by the Bank for International Settlements. “It’s more of a speculative asset that is essentially a substitute for gold, rather than the dollar.”
Powell spoke on a day when Bitcoin fell on Coinbase, but was still trading nearly $ 57,000 a piece. The cryptocurrency has risen in price in the last seven months, amid a boom in trading activity and a growing acceptance in the financial industry.
For the past few years, the Fed has been working on its own payment system that facilitates the faster transfer of money, with the disclosure of the final product likely to take place over the next two years.
At the same time, the Federal Reserve also undertook further investigations into the need or practice of a central bank digital currency.
On the last issue, Powell said the Fed takes its time before moving on to anything.
“To go further in this direction, we would need buy-in from Congress, from the administration, from broad elements of the public, and we haven’t really started the work of this public commitment,” he said. “So you can expect us to move with great care and transparency in the development of a central bank digital currency.”
The Boston Fed last year partnered with the Massachusetts Institute of Technology on the basis of a multi-year study on the development of a central bank digital currency. The work is expected to take two to three years, and even then it focuses more on the hypotheses of a central bank-sponsored cryptocurrency than on the imminent implementation.
Powell said Congress will probably have to pass some kind of enabling legislation before the Fed can continue with its own currency.
He noted, however, that the Covid-19 pandemic stressed the importance of developing better payment systems so that money could reach those in need quickly.
“He highlighted in a whole range of things the disparate impact of so many things on poor, low- and moderate-income communities,” Powell said.