The Federal Reserve Chairman, Jerome Powell addressed the audience at the Opportunities and Challenges of the Tokenization of Finance event, in Paris, saying that the US believes in the blockchain innovation deployed in the financial sector recently.
He noted that the collaboration between the Federal Reserve and the private sector is very vital as the private sector seems to pioneer these innovative financial instruments, while the Federal Reserve is meant to reap from it and institute guidelines on how to utilize these tools.
The Chairman also explained that the Federal Reserve. is exploring a payment product that will be released in a year’s time to Americans. He added that the tool, which is being designed using the latest technology, will help the public make and receive payments faster via their banks.
Further, on the role of the Federal Reserve in making the financial system safer, Jerome explained that smart contracts and decentralized governance used by crypto assets are good but need to be regulated.
He pointed out that sometimes the efficiency of these tools is superficial and not actual. These overestimations of the value of these blockchain technologies harm users because the risks are ignored and regulations are yet to be implemented in the market.
CBDCs in America will not be anonymous
When quizzed about the need for CBDCs in America, Jerome answered that America is researching the development of a CBDC that will be used in the country. He insisted that the Federal Reserve. remains the balance point in the financial market to maintain stability. Policy and technology, Jerome said, must go hand in hand.
Cash will not disappear in America, the Chairman opined on the case of a cashless economy as Sweden operates. We will need cash for a very long time, Jerome reiterated. It is still a vital tool of the Federal Reserve. and that is important to build trust for Americans in the ability of the apex bank.
Finally, Jerome explained that any CBDC that America will develop will not be anonymous. This is the opposite of what Europe is developing – a semi-anonymous financial tool, according to Christine Lagarde.
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