Members of the United States House of Representatives Financial Services Committee have now started to address the rise of cryptocurrencies. Two of U.S. Congressmen have asked the Federal Reserve of future plans to launch a digital version of the U.S. dollar.
In a letter sent on Monday to the Chairperson of Federal Reserve, Jerome Powell, U.S. lawmakers, Rep. French Hill (R-Arkansas) and Rep. Bill Foster (D-Illinois) assert that the “nature of money is changing.” According to their belief, the US dollar is moving towards the risk of getting left behind with digitization taking over the globe as governments around the world are aiming to modernize their monetary systems and reinvent ways in which they create, transfer, and distribute money. Standing at this point, Hill and Foster have urged the Fed to leverage on its ability and role to develop a “national digital currency.”
In the open letter, the two Congressmen have expressed high concerns by criticizing the contemporary US dollar as a decidedly old instrument that has remained stagnant in between a long line of earlier colonial currency and paper money or Continental currency, which was first issued by Congress about 240 years ago.
With the potential of digital currencies in further taking on the characteristics and utilities of paper money, it has become increasingly imperative that the Federal Reserve take up a project of developing a digital U.S. dollar,
said the Congressmen. The letter further goes on to cite a study from the Bank for International Settlements (BIS). The aforementioned study claims that over 40 nations have either already developed or are looking into developing their own digital currencies. For instance, the central bank of China has announced its plans to launch a digital version of the yuan by early 2020. Also, a number of recent pilot tests and examples from other nations like Sweden’s “e-krona” and Uruguay’s “e-peso” were also brought to the notice of the Fed.
Facebook-led stablecoin project, Libra, along with a bunch of other recent cryptocurrency-related efforts by the likes of JP Morgan and Wells Fargo were also mentioned in the letter by the two Congressmen. According to them, there remains a lot of risk factors involved with private companies developing their own digital currencies, which might even include a lack of control of monetary policies.
Therefore, Hill and Foster are seeking answers from Powell on a set of questions regarding the potential development of a US dollar digital currency.