Two members of the U.S. House of Representatives Financial Services Committee have requested that the Federal Reserve considers the creation of a U.S. dollar digital currency.
On 30 September, U.S. Representatives French Hill and Bill Foster sent a letter to Jerome Powell, a Board Chairman of the Federal Reserve, expressing their concerns that the USD importance could be at risk if a widely used digital fiat currency was created by another country or a private company. They wrote:
“We are concerned that the primacy of the U.S. Dollar could be in long-term jeopardy from wide adoption of digital fiat currencies. Internationally, the Bank for International Settlements conducted a study that found that over 40 countries around the world have currently developed or are looking into developing a digital currency.”
In their letter, the two lawmakers also urged the Federal Reserve to “take up the project of developing a U.S. dollar digital currency”, as the use of cryptocurrencies could “increasingly align with that of paper money in the future”.
They also stressed that as the central bank of the U.S., the Fed have the “ability and the natural role” of creating a national digital currency.
The two congressmen also asked a number of questions in their letter, such as if the Fed is looking into creating a digital currency, and if they have a contingency plan in the case of a cryptocurrency gaining traction.
They further ask if there are any legal, regulatory or national security issues that could prevent the development of a digital dollar, and what the risk and benefits would be of such a venture.
Just last week, Simon Potter, a former senior Federal Reserve official, said that it made no sense to replace the U.S. dollar dominance with a digital currency.
He further said that no arguments could be made to “have something that complicated out there when you have large, liquid capital markets in the U.S.”.