The U.S. central bank is not in any rush to create a digital dollar, Fed Chairman Jerome Powell suggested on Monday.
“I actually do think this is one of those issues where it it important for the United States to get it right than it is to be first,” Powell said during a discussion on central bank digital currencies sponsored by the International Monetary Fund.
Many economists believe a digital dollar could have helped during the pandemic by speeding stimulus checks to households.
Powell said there are benefits from a digital currency, including faster and cheaper transactions and the potential to reach consumers who are underserved by financial institutions.
He said the Fed’s main focus was on the payments system.
But there are also challenges, the Fed chairman said, including potential cyberattacks, monetary policy implementation, and preventing illicit activity.
“We have not made a decision to issue a CBDC and we think there is a great deal of work to be done…before making such a decision,” Powell said.
The central bank of China is at the forefront of digital currency use, pushing to make the yuan more of a global currency. The country launched a trial of a digital currency last week.
U.S. officials have been more content with the current global payment system, because the U.S. economy benefits from having the dollar as the world’s principal reserve currency.
Powell said that half the $2 trillion of U.S. bank notes in circulation are held outside the U.S.
Any digital currency would be a complement and not a replacement for cash, Powell said.
The Boston Fed is already working with Massachusetts Institute of Technology to perform technical research related to a central bank digital currency.