Federal Reserve Chairman Jerome Powell on Monday warned that cryptocurrencies are not useful stores of value and that there is no rush to establish a competitor, according to CNBC.
- In a virtual panel discussion, Powell said cryptocurrencies are more of a speculative asset that are essentially a substitute for gold rather than the dollar. He noted that they are highly volatile and are not backed by anything.
- Powell said the Federal Reserve is taking its time on studying if a central bank digital coin would be necessary or practical.
- The Fed chair said a digital coin would need buy-in from Congress, the administration, broad elements of the public. A legislation will likely have to be passed first, and the Fed has yet to start public engagement.
- Powell’s speech came as the bitcoin was down, but still trading near $57,000 apiece. It has soared in the past seven months with growing attention from the financial industry.
- Powell said, however, that the COVID-19 pandemic highlighted the need to develop better payment systems to enable immediate fund transfers for those in need.