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The Us Federal Reserve has warned that the rising use of cryptocurrencies could threaten the dominance of the US dollar.
But that alone is unlikely to “fully offset” the dollar’s role, fed economists said in a research note.
The report comes as the Fed is expected to release another highly anticipated CBDC report soon.
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The dollar’s dominance in global markets should continue, but could be threatened by the rapid rise of cryptocurrencies, according to a new Report from the Federal Reserve.
In their paper “The International Role of the Dollar,” Federal Reserve economists Carol Bertaut, Bastian von Beschwitz and Stephanie Curcuru write that private digital currencies such as Bitcoin and Ether, as well as government-backed digital currencies, could reduce reliance on the dollar.
They cite changes in consumer and investor preferences, while new products may alter the balance of expected costs and benefits.
“Even so, technology alone is unlikely to change the picture enough to completely offset the dollar’s long-term dominance,” the paper added.
The study comes as the Federal Reserve is expected to release another highly anticipated report soon on whether the US should issue a central bank digital currency.
But key Fed officials are divided. While Jerome Powell, the Fed chairman, has expressed some openness to the CBDC, other Fed officials, such as Randal Quarles, the vice-chairman, have been more sceptical.
Quarles said in July that while public interest in the digital dollar had reached “fever pitch,” the dollar was already highly digital, an arrangement he said was “good for the country and good for the economy.”
In addition to digital currencies, the Fed economists’ study highlights two other short-term challenges that could affect the dollar’s international standing.
Reprint indicated source：Spark Global Limited information