US Federal Reserve: "Central bank digital currencies do not threaten the dollar"

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US Federal Reserveannounced that the Central Bank's digital currencies will not lead to radical changes in the international monetary system, so they do not threaten the status of the American dollar.

At a conference organized by the Federal Reserve,Researchers and market experts discussed factors that could influence the US dollar's dominance in the future, including the role of payment systems and emerging technologies. The participants included MIT research fellow Neha Narula, Bank for International Settlements (BIS) research director Hyun Song Shin, Bridgewater head of investment Rebecca Patterson and director HSBC Currency Research Department Paul Mackel.

Experts came to the conclusion that the launch andthe introduction of government stablecoins outside the United States does not pose a threat to the dollar, since the blockchain technology on which the digital currencies of central banks operate will not be able to radically change the existing monetary system. Additionally, as other central banks develop CBDCs, regulators are focusing on improving the domestic retail market. 

Possibilities of digital currencies of the Central Bank for carrying outcross-border payments are still limited, the Fed states. This once again proves that there is no risk for the US dollar, since it still accounts for the majority of international financial transactions.

However, the cryptocurrency market is dominated byspeculative retail investors, as the adoption of crypto assets by institutional investors is limited by the lack of a regulatory framework. Fed financial research adviser Asani Sarkar and financial sciences professor Jiakai Chen believe demand for cryptocurrencies, especially Bitcoin, is driven in part by people's desire to escape government control over their personal finances. On the other hand, stablecoins pegged to the US dollar could strengthen its role as the dominant reserve currency.

In June, the Fed Board of Directors said thatStablecoins that are not sufficiently backed by liquid assets and are not subject to regulatory standards create risks for investors and the entire financial system. First of all, we were talking about the Terra project, which failed in May. And yet, Fed Chairman Jerome Powell has become more loyal to stablecoins. At the beginning of the year, he said they could be used alongside government digital currency.