Digitizing the dollar is a key factor in maintaining its appeal as a global currency, Trump’s nominee to the Federal Reserve, Judy Shelton, says.
In a congressional hearing on Thursday, Fed nominee, Judy Shelton, said the Federal Reserve should be “compelled to think” about a central bank digital currency (CBDC) given the mileage the innovation offers to rival countries such as China. Shelton believes the U.S should rely on fintech innovations to keep themselves abreast in financial matters and retain the dollar as the global reserve currency.
Tom Cotton (R-Arkansas), was critical of the benefits the that CBDCs offer saying that having a digital dollar will increase the dominance of the country and maintain the countries power in global influence. Asking Shelton’s opinion on the possible development of a digital dollar. Shelton said,
“The dollar is the most important soft instrument of power that we have across the globe. Yes, it is a dominant reserve currency but we can’t rest on our laurels in that regard.”
The accelerated efforts on development of a digital currency by both Facebook’s Libra project, and the People’s Bank of China (PBoC) CBDC is a key point that Ms. Shelton focused on too. She emphasized that the U.S. should not lag behind as it seeks to retain its control as the largest reserve currency in the world. She said,
“Rival nations are working very diligently to have an alternative to the dollar. I think it is very important that we get ahead of the curve to ensure that the dollar continues to offer the best currency in the world.”
With Shelton having shown affinity to blockchain, cryptocurrencies, CBDCs and stablecoins before, her appointment to the Fed board shows light at the end of the tunnel in regulation of cryptocurrencies across the states.