The Chairman of the Federal Reserve outlined that the US will not haste its own digital currency project despite China’s rapid advancements. He revealed that the CBDC approach undertaken by the Asian country will not be effective in the USA.
China’s CBDC Won’t Work in the US
With the rapidly expanding topic of central bank digital currencies (CBDCs) in countless countries, the world’s largest economy is yet to provide a definitive stance. Although the US dollar remains the leading reserve currency, the nation’s position could be challenged if it falls behind.
However, Federal Reserve’s Chair, Jerome Powell, outlined once again that the US cannot afford to rush the project. Moreover, he doubled down on a previous assertion indicating that the country has a responsibility to “do it right” instead of doing “it fast.”
Furthermore, Jerome Powell noted that the Chinese model of digitizing its yuan will not work properly in the US as the two countries are very different and require distinctive approaches:
”The currency that is being used in China is not the one that would work here. It’s one that really allows the government to see every payment for which it is used in real time.”
Powell also informed that the US central bank is in a stand-by position regarding a possible CBDC. In his words, the institution needs to get familiar with the technology behind the project. The end-product must be understandable for US citizens and also for people in other countries relying on the dollar.
China’s Stage of Launching CBDC
While the US keeps stalling, China is already running pilot programs to analyze the digital yuan. More recent reports even suggested that the world’s second-largest economy plans to enable athletes and tourists from abroad to use the Chinese digital currency during the 2022 Beijing Winter Olympics.
Despite China’s advancement into the digital currency world, some market authorities shared Jerome Powell’s opinion that the rush into the digital yuan might not provide the expected results. Karl Schamotta, Chief Market Strategist at Cambridge Global Payments in Toronto, commented:
”You are looking at a currency that will essentially have no anonymity and will be strictly under the control of the state.”