United States Secretary of the Treasury Steven Mnuchin said that he and Federal Reserve Chairman Jerome Powell do not anticipate the development of a national digital currency in the country.
Mnuchin delivered his comments during a House Financial Services Committee hearing in Washington, Bloomberg reported on Dec. 5. “Chair Powell and I have discussed this — we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency,” Mnuchin said.
The Treasury secretary’s statement came in response to a question about Facebook’s yet-to-be-released Libra stablecoin. Mnuchin further said that he has no objection to Libra, as long as it is fully compliant with bank secrecy and Anti-Money Laundering regulations, so that “In no way can this be used for terrorist financing.”
Regulators’ critical stance towards crypto
The Federal Reserve sent a letter to U.S. Representatives French Hill and Bill Fosters in mid-November, in which the agency revealed that it is not currently developing a central bank digital currency (CBDC), but it has assessed and continues to evaluate the costs and benefits of such an initiative.
Powell said in the letter that, prior to issuing a CBDC, the Federal Reserve has to address a number of legal questions, including monetary and payments policies, financial stability, supervision and operational issues, and their vulnerability to cyber-attacks.
On Dec. 4, a panel of senior financial regulators in the United States headed by Mnuchin warned the public about the purported risks of stablecoins and cryptocurrencies. The regulators stated:
“If a stablecoin became widely adopted as a means of payment or store of value, disruptions to the stablecoin system could affect the wider economy. Financial regulators should review existing and planned digital asset arrangements and their risks, as appropriate.”