Bitcoin

Fed’s Powell Has No Plans To Issue Digital Currency

While the Federal Reserve does not have plans to issue digital currency, it is actively researching the underlying technology, said John Williams, president of the San Francisco Federal Reserve Bank.

“Right now, the Federal Reserve is not developing its own digital currency,” Williams said when asked his thoughts about bitcoin at an economic outlook luncheon in Phoenix, Arizona. Central banks worldwide are interested in how the technology that underlies bitcoin could make payments safer, cheaper and more efficient, Williams said, adding that some may also consider adopting digital currencies as official money.

Earlier this year, Jerome Powell – President Donald Trump’s pick as chairman of the Federal Reserve – told conference attendees at Yale Law School that digital currencies issued by a central bank would become global targets for cyberattacks, cyber counterfeiting and cybertheft.

“Central banks could face difficult trade-offs between strengthening security and enabling illegal activity,” Powell said. “Advanced cryptography could reduce vulnerability to cyberattacks, but make it easier to hide illegal activity. To the extent we relax strong cryptography to make it easier for authorities to monitor illegal activity, we could simultaneously weaken security.”

While JPMorgan CEO Jamie Dimon has called bitcoin a “fraud,” he admitted that he would be more comfortable with a government-backed digital currency. In addition, the Bank for International Settlements said in a September report that central banks may one day need to issue their own cryptocurrencies.

Powell, however, has spoken about the challenges for widespread adoption of distributed ledger technologies, including “meaningful technical challenges” and “privacy issues.” He also noted that a central bank-issued digital currency “may stifle innovation over the long run,” since it would compete with improvements in federal payments technology and private sector innovations.

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