A recently-held conference was discussed by the US Federal Reserve, which was focused on the topic of CBDCs, crypto, and stablecoins. The central bank said that most experts believe that there would not be any impact of a central bank digital currency (CBDC) on the global currency market.
The conference talked about the role of a CBDC developed in the United States, as well as that of stablecoins. Plus, the future of the US dollar as the reserve currency of the world was also discussed.
CBDC is no threat to the dollar
According to the panelists attending the conference, a CBDC developed outside the US would not have any impact on the dollar, as the currency would not be threatened. There had been concerns about the US dollar being replaced as the world’s reserve currency because of the development of the digital yuan by the Chinese government.
Digital assets were also a topic of discussion amongst the panelists and they contemplated whether a CBDC would offer any benefits to the US dollar, or not. The panelists asserted that the global currency system would not feel much of an impact on the underlying technology.
The experts asserted that there are different factors that are used for determining what currencies can be used as reserve assets, including political stability and the market structure. Apart from that, they also stated that the countries that were developing their CBDCs were doing so for providing support to their local retail market, which means that the global status of the US dollar was not under any threat.
Crypto could boost the dollar
The experts further added that while crypto adoption had certainly increased, there was not a lot of investment from institutional investors because there was not a defined and clear regulatory framework to govern this market. Therefore, it is mostly retail traders that are dominating the crypto market for now.
Even though the popularity of cryptocurrencies has certainly increased exponentially, the experts said that it would not be a threat to the US dollar in the short term. In fact, there were suggestions that crypto could actually help boost the dollar if they offer more services related to assets that are linked to the fiat currency, such as stablecoins.
Changing crypto stance
It is possible that the discussions at the conference could have an impact on the views of the Federal Reserve about cryptocurrencies. The Board of Governors of the Fed had stated in the previous month that there was no proper regulatory framework for overseeing stablecoins and they did not have enough backing, which could put the financial system at risk.
It is possible that these remarks were made in light of the TerraUSD (UST) stablecoin fiasco that plunged the crypto market into a deep abyss that it is trying to recover from. Previously, Jerome Powell, the chairman of the US Fed, had also shared his concerns about stablecoins, as have many other world authorities after the UST stablecoin implosion that also took down the LUNA token.