US Fed: “digital currencies can reduce dependence on the US dollar”

In the long term, digital currencies could challenge the dollar’s dominance in the global financial system, according to a report by the US Federal Reserve.

This week, the US Federal Reserve System (FRS) released a report on the international role of the US dollar. The heads of the Federal Reserve Department of International Finance believe that the dollar will not lose its privileged position in the global financial system in the foreseeable future. In the long term, however, the Fed has identified three potential competitors that could challenge the dollar’s hegemony: the European Union, China, and digital currencies.

“A changing payment structure could be a challenge for the dominance of the US dollar. For example, the rapid growth of digital currencies, both private and public, could reduce dependence on the US dollar, ”the report says.

Recall that in May, US lawmakers demanded from the Treasury and the Fed to report on the status of the development of the digital dollar. Around the same time, Fed Board Member Lael Brainard said the country should be at the forefront of developing a government cryptocurrency to strengthen the US dollar’s role as a global reserve currency. However, the Fed has not yet undertaken specific commitments to release the state cryptocurrency and has not presented a plan for its development.

Meanwhile, China continues to test the digital yuan. The scale of testing, for example, for operations in the domestic futures market or paying for fares on the Beijing subway, leaves no doubt that the country is in the final stages of deploying a state cryptocurrency.