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Federal Reserve Chairman Admits: Libra Rings Alarm Bells for Digitalizing the US Dollar, but Privacy is a Concern

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Federal Reserve Chairman Admits: Libra Rings Alarm Bells for Digitalizing the US Dollar, but Privacy is a Concern

During questioning by lawmakers, Federal Reserve Chairman Jerome Powell admitted that Facebook's stablecoin project Libra has indeed raised the issue of digitizing the U.S. dollar. However, Powell emphasized that the Federal Reserve is not yet ready to push forward with the development of a digital dollar.

Libra Rings the Digital Dollar Alarm

Federal Reserve Chairman Jerome Powell was recently questioned by Illinois Congressman Bill Foster on how the Fed would respond to competition pressures in the currency field from entities like the People's Bank of China or private companies such as Facebook, and the feasibility of the Fed issuing a digital dollar.

Powell admitted that the social media giant Facebook's announcement last year, backed by multiple companies, did indeed force the Fed to take the issue of the digital dollar seriously. Powell stated:

"This certainly rings the alarm bell, as global networks like Libra have the ability to rapidly develop widely and systematically in a short period of time."

However, Powell emphasized that the Fed has not yet decided whether to create or issue a digital dollar.

Privacy Issues are the Biggest Barrier

Powell believes that there are still many unresolved issues regarding digital currencies, with privacy being the biggestconcern, as the digital dollar would allow system maintainers, whether government agencies or private enterprises, to access transaction ledger records. While this is not an issue in China, it is not acceptable in the U.S.

"We will continue to work to overcome these issues, seek alternative solutions, and approach this work responsibly."

This conservative stance echoes Powell's past views. Powell stated at the Swiss Forum hosted by the International Institute for Management Development last year that consumers have many payment options available, and for them, the necessity of a digital dollar is not strong.

In addition, U.S. Treasury Secretary Steven Mnuchin also stated in December last year that there is no reason to aggressively push for the development of a digital dollar, at least not in the next five years, as the Fed does not have the necessity to issue a digital currency.

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