The United States has made no efforts to hide the fact that it considered China its biggest rival in the financial world. China’s focus on the cryptocurrency field has also riled American officials and the Federal Reserve chair has been feeling the brunt because of it.
In a sit down with the House Financial Services Committee, Jerome Powell was asked multiple questions of the state of the US economy as well as China’s plans with the cryptocurrency industry.
Jerome Powell was in charge of submitting his monetary policy report in front of the US House Financial Services Committee. Powell was then made to answer multiple questions from Congress where Representative Bill Foster took all his time to enquire about cryptocurrencies.
Foster questioned Jerome Powell about the potential for a central bank digital currency and how it can impact the suffering economy. The Fed chair was honest in stating that the dollar was holding fine especially when compared to the failing currencies of other currencies. To this Powell replied:
“Having a single government currency at the heart of the financial system is something that has served us well. It’s a very, very basic thing, it really hasn’t been in question, and I think before we move away from that, we should really understand what we’re doing. Preserving the centrality of a central, widely accepted currency that is accepted and trusted is an enormously important thing.”
Jerome Powell claimed that there was a risk involved in central banks taking up the responsibility of crypto and blockchain. The Fedcoin plan was first proposed to combat the idea of privately owned cryptocurrencies. During the Congress meet, Powell acknowledged that banks around the world were looking into CBDCs.
The Fed chair admitted that it was the responsibility of central banks to learn about the costs and benefits associated with a possible digital currency. This was also a segue into Powell’s comments about China’s fore into cryptocurrencies. The Federal Reserve chair stated that China was developing crypto in a completely different institutional context.
Jerome Powell added that China’s position on cryptocurrencies was very different from Bitcoin. China wants to create crypto that is governed by the centre but admitted that Bitcoin functioned on a free and decentralized model. According to Powell, the US just needs to watch over its shoulder for China while creating a solid regulatory ecosystem for cryptocurrencies.