July 14 (Reuters) – Federal Reserve Chair Jerome Powell on Wednesday said one of the stronger arguments for the U.S. central bank to set up a digital currency is that it could undercut the need for private alternatives such as cryptocurrencies and stablecoins.
Asked during a congressional hearing if having a digital currency issued by the Fed would be a more viable alternative than having multiple cryptocurrencies or stablecoins emerge in the payments system, Powell said he agreed. A stablecoin is a cryptocurrency that attempts to peg its value to a conventional currency such as the U.S. dollar.
“I think that may be the case and I think that’s one of the arguments that are offered in favor of digital currency,” Powell said during a hearing before the U.S. House of Representatives Financial Services Committee. “That, in particular, you wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital U.S. currency – I think that’s one of the stronger arguments in its favor.”
Fed officials will be broadly examining the digital payments universe in a discussion paper that could be released in early September, Powell said. He described it as a key