Digital assets could pose a threat to the supremacy of the US dollar, according to a new report posted on the Federal Reserve’s website.
Researchers at the Fed say that a “shifting payments landscape” and the “rapid growth” of both private sector and government-sanctioned digital currencies could reduce reliance on the dollar.
“Changing consumer and investor preferences, combined with the possibility of new products, could shift the balance of perceived costs and benefits enough at the margin to overcome some of the inertia that helps to maintain the dollar’s leading role.”
Despite these concerns, the Fed doubts that digital assets could ever completely topple the world’s leading fiat currency.
“It is unlikely that technology alone could alter the landscape enough to completely offset the long-standing reasons the dollar has been dominant.
In sum, absent any large-scale political or economic changes which damage the value of the US dollar as a store of value or medium of exchange and simultaneously bolster the attractiveness of dollar alternatives, the dollar will likely remain the world’s dominant international currency for the foreseeable future.”
Fed Chairman Jerome Powell said last month that he has no plans to outlaw cryptocurrencies.
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