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  • Two US congressmen believe that the Federal Reserve has the mandate and capability to build a national digital currency.
  • The Fed is unlikely to cooperate with virtual currencies according to Simon Potter an official at the central bank.

The members of the House of Representatives Financial Services Committee in the United States have questioned the Federal Reserve whether it has considered issuing a national digital currency. The  concerns to the Federal Reserve Board Chairman Jerome Powell were expressed by two representatives French Hill and Bill Foster via letter on September 30.

In the letter, the two explained their concerns regarding the US dollar which they believe could be in jeopardy. The letter said in part:

“Internationally, the Bank for International Settlements conducted a study that found that over 40 countries around the world have currently developed or are looking into developing a digital currency.”

One of their concerns was the ability of digital currencies adopting the characteristics as well as the utility of paper money. Therefore, the Fed has the mandate to “take up the project of developing a U.S. dollar digital currency.” The development of a safer and stable financial system through the issuance of a digital national currencies lies with the Fed.

Despite the call by the congressmen, the Fed is unlikely to yield in their favor. Besides, Simon Potter, a Federal Reserve official once said that the proposal to reduce the dominance of the US dollar in favor of digital currency is absurd.

“I see no argument that makes sense to have something that complicated out there when you have large, liquid capital markets in the U.S. Not having one currency that you can basically price things and have a deep market in, that makes life much harder for the global economy.

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