Robert Kaplan, President of the Dallas Federal Reserve, stated that he believes the United States Central Bank will eventually issue its own digital currency, believing that this is the final step in the digitization of the payment system.
According to Kaplan, the central bank is actively working on it, and he goes on to say,
“I would imagine that in the coming years – it’s something the Fed is actively working on right now – and I can see reasons why that will eventually get developed; China is already doing their own experiment with it. The Fed is still a “long way” away from making a decision and is currently researching the issues, including the potential impact on banks.”
The Opposite End Of The Spectrum
While Robert Kaplan is optimistic about the central bank and the cryptocurrency market, Minneapolis Federal Reserve President Neel Kashkari is skeptical. Kashkari stated that he did not believe the world’s largest and most popular cryptocurrency had any real-world applications, citing the digital asset sector as prone to hype and fraud.
Kashkari stated at the Pacific Northwest Economic Regional Annual Summit, “Cryptocurrency is 95 percent fraud, hype, noise, and confusion.”
While cryptocurrencies have gained significant traction in the current year, they are still viewed as a highly speculative and risky asset when compared to traditional markets.
Perspectives on Monetary Policy Plans
Kashkari also commented on monetary policy plans, stating that he still sees significant slack in labor markets. He suggested that he might need to see more strong job reports before agreeing to reduce the monthly purchase of $120 billion in Treasury and mortgage-backed securities.
The remarks by the President of the Minneapolis Federal Reserve take precedence because they come at a time when there is a growing debate about the timing of the Def’s withdrawal of Covid-era accommodations as the economy tries to recover from the effects of the pandemic. Kashkari believes that if the job market is favorable, it would be reasonable to reduce bond purchases by the end of the year.
Despite significant concerns about the Delta variant of the Covid virus, the United States added 943,000 jobs in July, indicating that the economic recovery was gaining traction.