Treasury Secretary Steven Mnuchin was not the only one making waves in the US Senate this week when the future of currencies was discussed. Tom Cotton, a Republican senator from Arkansas, spoke at length about digital currencies while in front of the cameras and talking to Federal Reserve Reserve Board of Governors nominee Judy Shelton:
“We need less a digital currency, I would argue internally, and more to help maintain the primacy of the dollar worldwide”.
When asked how it would protect the dollar as a reserve currency and what this could mean with a digital US dollar, Shelton replied:
“I think this is an extremely important discussion and I agree with your assessment: I think we should think about it.”
What Judy Shelton would mean for the Federal Reserve
Ms. Shelton is one of two candidates for the federal agency to undergo a confirmation hearing. The other is Christopher Waller, Director of Research at the Federal Reserve Bank of St. Louis. She spares no controversy about her views on the currency and the US economy. For example, she has long advocated a return to the gold standard, which was abandoned in the United States in 1971.
Cotton’s comments also touch on initiatives for digital currencies, such as those currently being taken by companies like Facebook and China’s own central bank. Facebook plans to launch its own crypto currency, Libra, in 2020, while the Chinese central bank has taken steps to digitize the renminbi.
Such measures in the public and private sectors can have a negative impact on the US economy if it does not move with the times. For the US Federal Reserve, the discussion about a digital dollar is therefore extremely important.