The Fed wants to have its own cryptocurrency - will there be a digital dollar?

First, a massive criticism of Facebook-branded Libra and the announcement of introducing regulations that will significantly limit cryptocurrencies, and then a 180-degree turn and a proposal to launch ... "Digital dollar". Or maybe this is not a turn, but that was what the US Federal Reserve meant, which - as you know - does not like competition?

Let's remind: after the announcement of Facebook that he will introduce Libra Coin, i.e. cryptocurrency, which will be not only decentralized, but also safe and easy to use, in American financial institutions boiled. Libra was to be handed over by Messenger, which would in itself allow it to take over a large part of the market.

It immediately aroused mass criticism of some American financiers, politicians and representatives FED. The arguments have always been the same: the new cryptocurrency can threaten the strength of the dollar as the world's most important currency. Some even claimed that it could be a problem for the entire US economy. As a result, several significant players withdrew from the project. However, many more are waiting for them.

Be sure to read: The Libra Coin Association is officially launched. Some join, others give up

Meanwhile, it turned out that representatives of the House of Representatives in the US government wrote a letter to the chairman of the Fed, Jerome Powell, in which they directly asked whether instead of trying to block other initiatives, it would be better to show their own. The letter concerns the possibility of the issuance by the US government of a fully American-controlled cryptocurrency, which is called USD CBDC (Central Bank Digital Currency). From the very name it can be concluded that it will be based on the dollar and endorsed by the Central Bank. This would not be an innovative solution, because the almost identical Chinese are working on it, who want to launch the project next year. So far, however, the US authorities have tried with great caution to approach official entry into this branch of the financial market. The response of the Fed boss is not as decisive as it has been so far.

Jerome Powell: we can do it

"Although we are not currently developing a central bank digital currency, we have assessed and continue to carefully analyze the costs and benefits of implementing such an initiative in the United States." - wrote Jerome Powell, head of the Fed.

Earlier, however, he was definitely negative about the introduction of Libra, which according to him was a threat to order in the US market, undermining the current stability, as well as being a threat to consumers. That is why regulations that increase control over cryptocurrencies came into force in the US this year.

State cryptocurrencies and the Bitcoin exchange rate

Of course, any such discussion, and even a rumor, causes a lot of stir in the virtual coin market. When the information about the fact that they are investing in blockchain technology was announced by the Chinese, the course Bitcoin He fired. However, it turned out that supporting modern technology was not at all aimed at strengthening the social reception of cryptocurrencies in the Middle Kingdom, because a moment later Xin Jinping directly said that cryptocurrencies are a scam. Following this announcement, the People's Bank of China began work on introducing further restrictions on trading tokens.

This, of course, has to do with the fact that China has been working on its own cryptocurrency since 2014 and there will not be much room for competition in the economy of "controlled capitalism". Although it will certainly not be completely limited, after the introduction of appropriate regulations it will simply not be financially competitive and it will not be the main force in the market.

The Chinese token is, of course, to be based on blockchain and intended mainly for retail payments. The solution developed by the Chinese is said to have dealt with the biggest problem of cryptocurrency liquidity - the execution of a large number of transactions at the same time. Its implementation on the market, on which will be distributed by the People's Bank of China, is already planned for 2020 year.