The former governor of the Federal Reserve Bank Kevin Warsh believes that the creation of FedCoin “bring legal activities into a digital coin” deserves serious consideration, reports The New York Times on May 4.
FedCoin Cryptocurrency can help the Federal Reserve in crisis
Kevin Warsh – American financier, who was the governor of the Federal Reserve from 2006 to 2011. He was the main contender to become its chairman when Trump’s government chose Jerome Powell. Warsh said that if he returned to the Federal Reserve, he formed a team
“to think about the Fed creating FedCoin, where we would bring legal activities into a digital coin”
He said: “Not that it would supplant and replace cash, but it would be a pretty effective way when the next crisis happens for us to maybe conduct monetary policy.”
Tool for bank transfers
Warsh said that “most central banks have a view that these crypto-assets are clever, like guys in the garage did it and it’s kind of cool, or risky,” given the potential for investor loss and large-scale fraud.
He reportedly noted that the technology of the blockchain system would benefit the Federal Reserve System in terms of its payment systems. This, according to Warsh, will transfer trillions of dollars between banks.
Jerome Powell said:
“We actually look at blockchain as something that may have significant applications in the wholesale payments part of the economy”
As a calculated monetary unit
According to Warsh, central banks should view the digital currency as something more than a novelty, if people really believe to some extent that the cryptocurrency is the future of money.
“Congress gave the Fed a monopoly over money. And if the next generation of cryptocurrencies look more like money and less like gold — and have less volatility associated with them so they would be
not just a speculative asset but could be a reliable unit of account
as a purely defensive matter, I wouldn’t want somebody to take that monopoly from me.”
A few words about other countries
Some central banks are already moving forward with research and testing on decentralized ledger technology. In March, the Bank of England announced is undertaking a proof-of-concept (PoC) to understand how the renewed Real Time Gross Settlement (RTGS) service could be capable of interacting with Distributed Ledger Technology (DLT).
The European Central Bank (ECB) completed research of Blockchain’s potential for transforming securities settlements with the Bank of Japan (BoJ). Recently, South Korea’s central bank, the Bank of Korea (BOK), has announced it is considering cryptocurrencies and blockchain applications for its project for a “cashless society.”