Fed Chair Powell: No Immediate Plans for U.S. Digital Currency
Fed Chair Jerome Powell has confirmed to the Senate Banking Committee that the Federal Reserve is not close to launching a central bank digital currency (CBDC), alleviating concerns over privacy and government surveillance. During the hearing on March 7, Powell emphasized that the Fed’s focus remains on maintaining the current banking system structure, where only banks hold accounts with the Fed, and any potential CBDC would operate through these banks without direct government monitoring of individual transactions. Powell’s statements come amid global developments in digital currencies, with other countries advancing their CBDC projects, and political debates in the U.S. regarding the future of a digital dollar.
In a recent Senate Banking Committee hearing, Federal Reserve Chair Jerome Powell addressed the topic of a U.S. central bank digital currency (CBDC), stating that the Fed has no immediate plans to introduce one. Powell reassured the committee and the public that the concept of a digital dollar is still under study and that implementation is not on the horizon. He stressed the importance of privacy and the traditional role of banks, indicating that the Fed would not support a system that allows government visibility into individual transactions.
Powell’s comments come as other nations, such as Hong Kong and the BRICS bloc, are making strides in developing their own digital currencies. The Philippines is also nearing the completion of its wholesale CBDC. However, Powell made it clear that the U.S. is “nowhere near” recommending or adopting a CBDC and that any such move would require Congressional approval.
Former President Donald Trump has expressed opposition to a CBDC, suggesting it could lead to “government tyranny.” His stance appears to resonate with his supporters, as recent polls show him leading in a hypothetical 2024 election matchup against President Joe Biden. The political debate continues, with policymakers and political figures taking positions on the issue.
As of December 2023, data from the Atlantic Council indicates that 11 countries have launched a CBDC, with 21 countries conducting pilot trials, including China’s e-yuan. The U.S. remains cautious, with President Biden’s executive order in March 2022 urging the Fed to explore a possible CBDC, but with no concrete steps taken towards its development. Powell’s recent statements reinforce the Fed’s position of careful consideration and adherence to existing financial structures.