CBDCs to coexist with cash payments, according to FED Chairman Powell

Reynaldo Marquez

4 years ago

2 mins read

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The Committee on Payments and Market Infrastructures conference was held in Basel, Switzerland. One of the main guests was the Chairman of the U.S. Federal Reserve, Jerome Powell. Referring to a report created by the institution he chairs and other banking institutions, Powell said:

A recent report from the Bank for International Settlements (BIS) and a group of seven central banks, which includes the Fed, assessed the feasibility of CBDCs in helping central banks deliver their public policy objectives.

In 2020, the G-20 called on the Financial Stability Board to construct a roadmap to “improve cross-border payments”. Thus, Powell explained, the financial system can dismantle existing obstacles for users and become independent of outdated technologies.

Based on the report, Fed Chairman Powell believes that central bank digital currencies (CBDC) must be leveraged alongside traditional payment methods, like cash. Powell also asked to create a “flexible system” which enables said coexistence.

That way, institutions can meet the consumer demand for a digitized settlement system. He added:

The Covid crisis has brought into even sharper focus the need to address the limitations of our current arrangements for cross-border payments. And as this conference amply demonstrates, despite the challenges of this last year, we still have been able to make important progress.

CBDCs will reduce costs in traditional payment system

As a goal, the roadmap called for by the G-20 proposed to create a “low-cost, transparent and inclusive” ecosystem for cross-border payments. To improve the system, the FSB has outlined 19 key steps that will modify it, while assessing and implementing new technologies.

With a seamless operation, enhanced data security, and payment integrity, Powell expects the “FEDnow” system to be the backbone of such an ecosystem. Fed chairman revealed that the new system has a tentative launch date of late 2023 or 2024. Powell added:

The Fed is also doing its part to examine the role of new technologies. Experiments with central bank digital currencies are being conducted at the board of governors. As well as complementary efforts like the Federal Reserve Bank of Boston in collaboration with researchers at MIT.

The Federal Reserve Chairman emphasized the private sector’s ability to improve the “outreach” of consumers to the financial system. In emerging economy countries, Powell said, the digitization of financial services could be the key to including the unbanked. Powell concluded:

Improving the financial system is a collaborative effort.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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