Two U.S. lawmakers, Representative French Hill (R-Arkansas) and Rep. Bill Foster (D-Illinois), have asked the Federal Reserve, the country’s central bank, to consider developing a digital dollar.
In a letter sent to Fed Chairman Jerome Powell on Monday, Hill and Foster said that the “nature of money is changing,” and the Fed has the ability and the natural role to develop a “national digital currency.”
The Congressmen outlined concerns that the U.S. dollar could be in “long-term jeopardy” from the wide adoption of digital fiat currencies. Citing a study from the Bank for International Settlements (BIS), they said that over 40 countries have developed or are looking into developing a digital currency. China’s central bank, for instance, is expected to launch a digital version of the yuan later this year or in early 2020, they added.
“With the potential for digital currencies to further take on the characteristics and utility of paper money, it may become increasingly imperative that the Federal Reserve take up the project of developing a U.S. dollar digital currency,” said the Congressmen.
Hill and Foster also specifically mentioned the Facebook-led Libra stablecoin project, saying that private companies developing digital currencies have their own risks, including loss of control of monetary policy. The Congressmen also mentioned recent cryptocurrency efforts by JP Morgan and Wells Fargo.
Hill and Foster are, therefore, seeking answers from Powell on a number of questions, including whether the Fed is currently exploring the development of digital currency and whether there are any plans if digital fiat currencies gain traction.
Last year, Sheila Bair, the former chair of the US Federal Deposit Insurance Corporation (FDIC), also recommended the Fed to seriously consider its own digital currency. The central bank, on the other hand, recently said that it is "strongly considering" going ahead with the launch of an instant payments network to rival Wall Street’s biggest banks.