(TheIndependentStar.com) – Cryptocurrency is a non-tangible financial tool, or, in simpler terms, digital money. Currently, all crypto is private, and no government backs any of the available coins. Due to this, cryptos are very lightly regulated, and can exhibit sharp increases and decreases in value.
The Federal Reserve is looking to change the state of cryptocurrency in the US, according to a message from Chair Jerome H. Powell on May 20, 2021. He spoke of the potential development of central bank digital currencies (CBDC).
The Federal Reserve is taking is exploring the creation of a digital U.S. dollar. The move could shake up the banking system while giving many low-income earners access to a financial system they might not have otherwise had. https://t.co/BjP7svhOz0
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A new digital US dollar system could help people who don’t have bank accounts and lower-income individuals who may not currently have access to online currency. The Federal Reserve also believes it could help build more confidence in the US dollar, which is essential to the country’s economic functioning.
There is opposition from banks, who would likely see increased competition as this move would allow people to operate outside of the institutions. The American Bankers Association warns of severe consequences and difficulties related to the management of CBDC.
The final decision will be made in Congress, where the idea does seem to have bipartisan support. There are still many considerations to take into account, including how the growth of cryptocurrencies might threaten the value of the dollar, China’s move to develop its own crypto, whether the US really needs this type of currency, and how developing CBDC could impact the role of the Federal Reserve.
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