Fed Chair Powell Provides Update on US Central Bank Digital Currency
Federal Reserve Chairman Jerome Powell has provided an update on the Fed’s central bank digital currency (CBDC) work in a hearing before the House Financial Services Committee. While stating that the Fed is “making progress on technological issues,” Powell stressed that “policy issues are equally important.”
Fed Chair Powell on CBDC Progress
During a hearing before the House Financial Services Committee on Wednesday, Congressman Stephen Lynch (D-MA) asked Federal Reserve Chairman Jerome Powell for an update on the Fed’s work regarding a possible central bank digital currency (CBDC), the digital dollar. Congressman Lynch serves as Ranking Member of the Subcommittee on Digital Assets, Financial Technology and Inclusion.
Regarding where the Fed is at on its CBDC work, Powell said:
We engage with the public on an ongoing basis. We are also doing research on policy and also on technology. That’s what we’re up to.
Noting that the Fed “did go out for comment, in general, on the CBDC a year or so ago,” Powell said he expects the central bank to do the same in the future but cannot give a date for when it will happen.
When asked about the Fed’s decisions regarding the structure and architecture for a CBDC, the Fed chairman clarified:
We are not at the stage of making any real decisions. What we are doing is experimenting in kind of early-stage experimentation.
“How would this work? Does it work? What’s the best technology? What’s the most efficient? — we are really in an early stage,” he continued.
While emphasizing that the Federal Reserve is “making progress on technological issues,” Chair Powell stressed that “policy issues are equally important.” He concluded:
We haven’t decided that this is something that the financial system in the country would want or need, so that’s going to be very important.
Meanwhile, several bills have been introduced in Congress to restrict the use of a CBDC should the Fed introduce one. Last month, Congressman Tom Emmer (R-MN) launched the CBDC Anti-Surveillance State Act which “bars the Fed from using a CBDC to implement monetary policy and control the economy.”