United States Congressman Bill Foster (D-IL) has questioned the Chair of the Federal Reserve Jerome H. Powell on U.S’s central bank digital currency (CBDC) progress at a hearing on monetary policy earlier today.
While comparing with some existing CBDC projects, Foster asked Powell’s current plan in responding to China: “How would you characterize our ability to respond to this potentially competitive threat?”
Foster said that China was in a position to scale its digital Yuan by using their established cell phone payment system.
Responding to the questions, Powell pointed out that U.S and China are different when facing central digital currency: “They are a completely different institutional context.”
Foster also worried that if the Federal government doesn’t react and issue a plan for a digital currency quickly, potential competitors like China could roll out CBDCs and gain an upper hand. He specifically cited China’s plan to implement the digital Yuan among countries involved in its Belt and Road initiative, it could jeopardize the dollar’s world reserve currency status.