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State-issued digital currencies are inevitable, Philadelphia Federal Reserve bank president Patrick Harker said Wednesday, joining a roster of lawmakers and bankers who have come out in support of such systems.
While Harker said that the US should not lead the way, he insisted that even the Federal Reserve will eventually end up issuing digital currency, according to Reuters. “Frankly, I don’t think we should be the first mover as a nation to do this,” he said.
But he added, “It is inevitable...I think it is better for us to start getting our hands around it.”
Harker’s comments echo the sentiments of a growing number of world leaders, including ING Chief Economist Mark Cliffe, who last week said that a so-called central bank digital currency would emerge within the next two to three years. Similarly, Bank of England governor Mark Carney last week posited a “network of central bank digital currencies,” or “synthetic hegemonic currency (SHC),” as a counterbalance to the destabilizing reliance on America’s trade-war-battered dollar.
"The dollar’s influence on global financial conditions could [...] decline if a financial architecture developed around the new SHC and it displaced the dollar’s dominance in credit markets,” Carney said.
Eastward, countries like China and North Korea are looking to issue their own digital currencies. While China’s planned currency is designed to allow government officials to more closely track citizens’ financial history, North Korea’s appears primarily aimed at bypassing US sanctions and speeding up costly settlement times.
Much of the conversation around state-issued digital currencies has been sparked by Facebook’s announcement of Libra, a digital currency the tech giant plans to run out of Switzerland. But even as lawmakers slammed the proposed currency in congressional hearings, many of those present described a digitized economic future as “unstoppable.”