The talks to allow digital currencies to exist in U.S. economy are underway. The suggestion is to achieve this by linking cryptocurrencies to the U.S. dollar. This contemplation took place on Tuesday at a meeting held by the U.S. Fed.
At the meeting, a panel of speakers stated that the dollar status would gain more strength with crypto assets in the U.S. economy. Moreover, this will also give a boost to the digital currency industry.
Strength Of Dollar Could Improve Through Cryptocurrencies
The current state of cryptocurrencies is still posing some level of uneasiness in the mind of cryptocurrency traders. Many still doubt that the market will take a bullish turn sooner than later. Considering this, the panelists thought it wise to mention incorporating these digital currencies into the U.S. dollar.
They believe that this will improve the status of the dollar and the cryptocurrency community. The panel added that the rise would be possible as crypto traders continue to use these digital currencies, particularly the CBDCs. They stated that the dollar changes would be evident in its role in the international market.
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According to the Fed Chair, Jerome H. Powell, there is a tendency for altcoins and stablecoins to increase in price. He made this statement last month. This reveals that the move to link cryptocurrencies to the U.S. dollar has been in the pipeline. He added that due to the fast growth of these digital assets, the Federal Reserve is now assessing the use of CBDCs.
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The idea behind the assessment is to know whether or not a CBDC would stand the test of domestic payment efficiency and safety. In addition, according to the U.S. Fed’s white paper, a CBDC could contribute positively to maintaining the international status of the U.S. dollar.
CBDCs As An Improvement To The U.S. Dollar
Going further in the discussions between the panelists, specific questions were addressed. One of which was whether or not the roles of the dollar can be positively affected by crypto technology. They concluded that the technological aspect alone of these digital currencies could not improve the ecosystem of this globally recognized currency.
This response had a reason backing it up; the ecosystem of these cryptocurrencies revolves only around retail investors. Also, there were steps to migrate to institutional investors, but those became abortive due to the missing regulatory framework.
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As a result, the US CBDCs will concentrate on retail sectors. This prevents any threat to the U.S. dollar while maintaining its international status. However, they also cited that there are still restrictions on the possibility of using cross-border CBDCs.
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