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2 Minutes Read In this picture made on June 29, 2021, representations of cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple, and Litecoin are displayed on a PC motherboard. (Reuters) – REUTERS/Dado Ruvic/Illustration/File Photo One of the strongest arguments for the Federal Reserve to create a digital currency, according to Federal Reserve Chair Jerome Powell, is that it might reduce the need for private alternatives like cryptocurrencies and stablecoins. When asked if having a digital currency issued by the Fed would be a better option than having several cryptocurrencies or stablecoins arise in the payments system during a congressional hearing, Powell agreed. “I believe that is the case, and I believe that is one of the reasons made in favor of digital currency,” Powell said at a hearing before the Financial Services Committee of the US House of Representatives. “One of the strongest arguments in its favor is that you wouldn’t need stablecoins or cryptocurrencies if you had a digital US currency.” Powell stated that the Federal Reserve will conduct a wide examination of the digital payments universe in a discussion paper that might be released in early September. He described it as a crucial step in the Fed’s quest to figure out whether it could create its own digital money. Powell expressed skepticism that crypto assets would become a primary mode of payment in the United States, but said that stablecoins might acquire popularity. He does, however, believe that greater regulation is required before stablecoins can play a larger role in the financial system. “We have a relatively solid regulatory structure in place for bank deposits and money market funds, for example,” Powell added. “That doesn’t exist for stablecoins right now, and if they’re going to be a substantial part of the payments universe – which we don’t believe crypto assets will be, but stablecoins may be – then we need an adequate regulatory structure.” Jonnelle Marte contributed to this report. Chizu Nomiyama and Paul Simao edited the piece./nRead More

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