Recently, the US Fed Reserve held a conference in the United States. The panelists agreed that a digital Dollar would not affect the international currency system.
Additionally, they agreed that other CDBCs do not threaten the value of the USD. However, well-developed cryptos could change the global role of the USD.
Some members stated that stablecoins could boost the value and power of the Dollar. This will occur if more stablecoins are pegged to the USD.
Fed Reserve Conference On CBDCs And Stablecoins
As per a report published by the US Fed on July 5th, expert panelists have a meeting on June 16th and 17th. The conference discussed issues of crypto, policymakers, and market research.
Additionally, the committee highlighted factors that could threaten the USD dominance. The panelist members include BIS head of research Hyun Song Shin, Bridgewater strategist Rebecca Patterson, and others.
According to the panel, several factors could affect the dominance of the USD. They include marker depth, political instability, and market instability.
Furthermore, they noted that other CBDCs do not threaten the international status of the USD. As a result, the Chinese digital Yuan does not affect the USD’s global standing.
This is because the usage of CBDCs for cross-border payment is still minimal. The USD accounts for more international transactions globally than any other currency.
Talking about digital currencies, the panelists think well-developed digital assets can harm the Dollar. However, retail investors are the ones dominating the crypto market.
This is because the lack of a regulatory framework prevents institutional investors from entering the sector. However, there has been a recent clamor for a comprehensive regulatory framework for the industry.
Dollar-Pegged Stablecoins To Strengthen The Power Of The Dollar
Also, there was a panel with Asani Sarkar, Fed’s financial advisor and Jiakai Chen, a finance professor. They said the high demand for cryptos like BTC is to bypass domestic capital controls.
Furthermore, the panelists believe that crypto will not threaten the role of the USD. Some panelists even believe crypto can strengthen the power of the Dollar.
This will occur if new digital asset structures are connected to the Dollar. These panelists are referring to stablecoins pegged to a national currency.
Before now, the Fed Board of Governors commented on stablecoins in June. They said stablecoins are not fully backed by proper regulations, and liquid assets are risky.
In addition, such stablecoins can harm the financial system and also investors. The board made this statement in reference to the recent fall of TerraUSD.
However, Jerome Powell, the chairman of the Fed Reserve, is optimistic about CBDCs. He believes that it can help maintain the international standard of the Dollar.