Fed Chair Says Cryptocurrencies Are "Not Really Useful Stores of Value"
His comments insinuated that the central bank is not pressed to introduce its own variation of a cryptocurrency. “They’re highly volatile and therefore not really useful stores of value and they’re not backed by anything,” Powell said during a session hosted by the Bank for International Settlements. “It’s more a speculative asset that’s essentially a substitute for gold rather than for the dollar.”
Bitcoin was down slightly following Powell's comments, trading just above $57, 100. Cryptocurrencies have surged in the past several months amid rising retail and corporate interest. The Fed has identified issues within the current financial system and has been actively researching and developing solutions. This solution aims to expedite the transfer of money with the central bank aiming to release it in the next couple of years.
Powell also touched on the Federal Reserve's investigation into whether a digital currency would be necessary on a monetary policy level. “To move forward on this, we would need buy-in from Congress, from the administration, from broad elements of the public, and we haven’t really begun the job of that public engagement,” he said. “So you can expect us to move with great care and transparency with regard to developing a central bank digital currency.”
Last year, the Boston Fed partnered with the Massachusetts Institute of Technology to study the pros and cons of a central bank cryptocurrency. The timeline on the project is two to three years.
Powell also noted that the COVID-19 pandemic demonstrated the need for faster payment transfer methods. “It highlighted across a whole range of things the disparate impact of so many things on poor and lower- and moderate-income communities,” Powell said.