In the light of sweeping popularity of cryptocurrencies, the US Federal Reserve System seems to have switched to the following principle – if you can’t stop it, steer it. The Fed members have come to understand that bans will not work for cryptocurrencies, so they are exploring the idea to develop an alternative federally backed cryptocurrency. This plan was announced by William Dudley, the president of the Federal Reserve Bank of New York.
He noted that, though this project has not been launched yet, experts are mulling it over. It is plain to see that these speculations were driven by a recent rise in cryptocurrencies’ values. All the fuss about digital currencies is something hard to keep out of. “At this point, it's really premature to be talking about the Federal Reserve offering digital currencies,” Dudley said. “But it is something we are starting to think about: what would it mean to have a digital currency, what would it mean to offer it, do we actually need it?” This statement may well be regarded as a tell-tale sign that the Federal Reserve System has recognized digital currencies.
Adherents of the conventional financial system cannot just ignore cryptocurrencies anymore, yet they still hesitate. On the one hand, they call for prudence in investing real money in digital currencies. On the other hand however, they admit that cryptocurrencies are a more efficient form of money than the US dollar. As William Dudley says, central banks “are thinking about whether they could be a more efficient medium of exchange than cash.”