The U.S. Federal Reserve is considering the issuance of a digital currency, according to one of its top officials, as concerns grow over the potential impact of rival national cryptocurrencies or corporate alternatives such as Facebook’s Libra.
Rob Kaplan, President of the Federal Reserve Bank of Dallas, speaking at a business event in Austin, Texas, said that the Fed had not yet decided to pursue or develop a digital currency, but it was “actively looking at and debating” the issue.
Concerns are growing that rival central bank issued digital currencies (CBDC), or corporate issued tokens such as the proposed Libra cryptocurrency could become widely adopted and threaten the US dollar’s position as the global reserve currency. Kaplan, reported by Coindesk, said:
I still think for the foreseeable future, the dollar will be the world reserve currency, we’re able to refinance our debt at relatively low rates, but I don’t think we should take that for granted. People around the world are working real hard to try to find alternatives to dollars and dollar infrastructure because the more they’re invested in that, the more susceptible they are to sanctions, tariffs and what’s going on right now.
Response to Giancarlo Comments
His comments serve as timely follow up to an article written in the Wall Street Journal this week by former Commodity Futures Trading Commission chair Christopher Giancarlo, calling for a national digital currency in the US. Giancarlo expressed similar concerns about the erosion of dollar dominance:
Significant actors, including central banks and social media platforms, may launch new currencies in the next few years. As their networks grow, they could eventually erode the dollar’s status as the most popular currency for international exchange.
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