U.S. to Explore Ways to Use Cryptocurrencies Within Economy
U.S. regulators are exploring ways to allow cryptocurrencies operate within the country's economy. One such possibility is to attach cryptos to the U.S., by way of example, creating a proxy currency for it or coupling cryptocurrency and USD with so[...]
The talks about allowing digital currencies to exist in the U.S. economy are underway. The idea is to achieve this by linking cryptocurrencies to the U.S. dollar, which was discussed at a meeting held by the U.S Fed on Tuesday (Davio, 2018).
The panel of speakers at the meeting said that the dollar would become stronger if crypto assets were used in the U.S. economy, and that this would also benefit the digital currency industry.
The strength of the dollar could be enhanced by cryptocurrencies as a result of their growing popularity.
Cryptocurrency traders are still uneasy about the future of the market, despite its recent bullish turn. Many people still believe that the market will not go up again soon. In view of this, it was considered wise by panelists to mention how these digital currencies can be added to the U.S dollar.
The panel believes that this will improve the status of the dollar and cryptocurrency community. The rise is possible as crypto traders continue to use these digital currencies, particularly CBDCs. The changes in the role of the dollar will be evident in international markets.
Jerome H. Powell, the Fed Chair, has claimed that altcoins and stablecoins tend to increase in price. He made this statement last month. This shows that the shift to link cryptocurrencies to the U.S. dollar has been planned for a while now. In addition, due to their rapid growth, he said that Federal Reserve is now assessing the use of CBDCs
The purpose of the assessment is to determine if a central bank digital currency (CBDC) would be effective and safe for domestic transactions. In addition, as stated in the U.S. Fed's white paper, a CBDC could help maintain the international status of the U.S. dollar.
CBDCs: A Way to Improve the US Dollar
In the following panelists' discussion, they covered specific topics. One of them was whether or not the role of the dollar could be positively affected by crypto technology. Their conclusion was that only by itself, digital currencies cannot improve this globally recognized currency's ecosystem.
The response was reasonable, as the ecosystem of these cryptocurrencies is focused only on retail investors. Also, there were steps to migrate to institutional investors, but they failed because of the missing regulatory framework.
As a result, the US CBDCs will focus on retail sectors. This prevents any threat to the U.S. dollar while maintaining its international status. They also noted that there are still limitations on the possibility of using cross-border CBDCs, though.