Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The Crypto Market ends the week at a total market capitalization of $1,175 trillion. Bitcoin has increased by over 6% this week. Ethereum gained almost 17% over the past seven days. XRP is up by nearly 3% this past week. Almost all altcoins are trading in the green, with very few exceptions. The DeFi sector increased the total value protocols (TVL) to around $44 billion. Crypto…
Panelists conclude Digital Dollars would add very little to the US economy.
Following a recent conference held by the United States Federal Reserve, it appears that the country’s key economists might not be too keen on CBDC development yet.
The Fed Comes Together to Discuss the USD
The Federal Reserve Board and the Federal Reserve Bank of New York hosted the event together. The conference mainly centered around the International Roles of the U.S. Dollar and featured top Reserve officials and economic advisers.
Notably, the conference’s aim was to explore the “evolving role” of the USD from the perspective of researchers, lawmakers, and market experts. Likewise, the meeting also sought to discuss likely changes that could affect the direction of the Federal Reserve.
Interestingly, amid the growing inflation, the participants largely agreed that the dollar’s current global status had not seen any significant adjustments. Later on, during a panel session centered around digital assets, the speakers concluded that a CBDC was unnecessary.
How CBDCs Affect the Dollar’s Global Status
First, they discussed the crypto space and the underlying technology, which later opened the door for conversation about CBDCs. Regarding central bank digital currencies, the panelists probed whether they made any significant contributions to the western power.
They eventually decided that, at the moment, cross-border CBDC use-cases are not advanced enough. Hence, a digital dollar would not be a noteworthy addition to the U.S. economy. In a Fed release, the panelists noted that the CBDC technology would not singly cause “drastic changes in the global currency ecosystem.”
They highlighted considerations such as the rule of law, market stability, network effects, and the depth of markets. According to the panelists, these factors ensure leading world currencies retain their dominance. Additionally, the release pointed out the lack of a defined regulatory structure.
Presently, retail investors constitute the main body of digital asset users; these individuals participate via speculative operations. However, the framework is not as welcoming to institutional investors given the regulatory gap, which also translates to CBDCs.
CBDCs not Entirely Out
The Reserve publication acknowledges that CBDC development is currently confined to the domestic sector. Thus, they do not threaten the USD’s global position. Fortunately, the outlook for CBDC integration wasn’t entirely negative.
Indeed, the panelists noted that digital assets could help strengthen the dollar. This is possible if “over the medium run”, they work alongside services with ties to the dollar. Over the past few years, talk of a CBDC launch has risen on multiple occasions.
The U.S. Federal Reserve did not respond to speculation until recently. In April this year, it revealed that it was considering releasing a digital dollar. At the time, the Fed did not share a likely launch date. And following the conference, the wait might be even longer.
Notably, two weeks back, Chairman Jerome Powell stated that the Reserve would provide Congress with advice on CBDCs. Once the Fed completed this, Congress would take charge by drafting policies regarding CBDC adoption.