Kevin Warsh, former Federal Reserve (Fed) Governor has suggested that the creation of a “FedCoin” needs “serious consideration,” reports the New York Times.
The concept of a cryptocurrency called FedCoin has provoked interest over past years, based on an idea proposed in 2014 by blogger JP Koning. Since then the idea has been much discussed, and the term is now generically used to describe a Central Bank digital currency which could be overseen by the Federal Reserve, IMF, and the World Bank.
Warsh wants to bring legal activities into a “legal coin,” suggesting that digital currency is still thought of by many banks as a risk, despite major banks beginning to warm up to its adoption, such as Goldman Sachs’ recent announcement that they would start trading in bitcoin futures in the next two months.
“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,” referring to recent frauds and coin volatility. Warsh feels that central banks should treat digital currencies as more than a novelty if people see it as the future.
Chairman of the Federal Reserve Jerome Powell, has already made some positive gestures towards blockchain — the technology behind digital currency, since his appointment earlier this year saying, ” We actually look at blockchain as something that may have significant applications in the wholesale payments part of the economy.” He went on to suggest that he could see cryptocurrencies as a “reliable unit of account” rather than just a “speculative asset,” given that the next generation of cryptocurrencies look more like money and had less volatility.
Major central banks now experimenting with digital currencies and/or blockchain are growing, including The Bank of England, the Banque de France, the People’s Bank of China, the Bank of Canada, the Central Bank of Russia and the Dutch central bank.
It remains to be seen if the Federal Reserve in the US joins these forerunners who are currently all considering the merits and the pitfalls of issuing their own blockchain-based digital currency.