Steven ZeniosPowell confirmed that the central bank is not actively considering mining cryptocurrencies and added that cryptocurrencies have a variety of concerns such as cybersecurity and concerns that they are unsuitable as a payment option.
He commented on the matter saying:
If you think about one currency that was for the United States, it would really need to be cyber secure. It’s one thing to be able to counterfeit paper currency, it’s another thing to hack into a cyber currency, and create with a computer, however much of it you want. So, cyber issues are quite daunting. I don’t want to sound like I’m ruling it out but there’s another question too. If people are leaving their money in cyber currency and holding it there, they’re not putting it in a bank. What happens with banks is that people deposit their money and banks lend the money out. So, what happens to the intermediation process if everyone is just investing in this cyber currency? So, I would say we are in favor of financial innovation.
Powell when questioned further about the opportunities that digital currencies present but the bank is missing replied with the issue of a lack of demand for digital currencies stating that those who use banks have a variety of payment options and that “they are not clamouring for this.”
Facebook’s Libra was also a topic when Powell addressed the forum in “The Economic Outlook and Monetary Policy” panel discussion. He informed the audience that due to the massive user base the project is required to comply with high standards of regulation and supervisory expectations. No details have been given or confirmed as to how it would work with current regulatory systems.
It was also reported that the Federal Reserve does not have plenary authority over cryptocurrencies as such however, it was stated that the Federal Reserve still has significant input into the payment system.
