Fed Powell eases digital dollar worries as governments step up CBDC efforts
The United States is nowhere near a central bank digital currency (CBDC), and even if it were, the central bank has no interest in anyone tracking users, Federal Reserve Chairman Jerome Powell said.
“I would like to say that we are nowhere near recommending or approaching, let alone adopting, a central bank digital currency in any form,” Powell said in a March 7 hearing before the Senate Banking, Housing and Urban Affairs Committee.
It comes days after Hong Kong's central bank issued a fresh push for wholesale CBCCs and geopolitical bloc BRICS reportedly started work on a blockchain-based payment system.
An official of the Central Bank of the Philippines also said on March 6 that the country's wholesale CBCC will be completed by the end of the year.
Powell spoke of concerns that the retail-focused CBCC would be subject to surveillance and “the government watching all your transactions” – pointing to China's digital yuan as an example.
It is something that we here in the United States will not stand for, or do, or propose.
If the Fed were to start a CBCC — “it's a long way to even think about it” — it would be done “within the banking system,” Powell added.
“The last thing we want – what we at the Federal Reserve want – is to have an individual account for all Americans, or any American for that matter,” he said.
“Only the banks have accounts at the Fed, and that's how we handle it,” Powell asserted. “People don't need to worry about central bank digital currency, nothing like this is close to happening in the near future.”
Powell has long said it is up to Congress to authorize the Fed's retail CDC, and he reaffirmed that position during the hearing.
Related: US senators oppose Joe Biden's CBCC plans
Senator Cynthia Lammis said: “There are concerns about the Fed creating a CBDC without the consent of the legislature.”
“Do you still agree that the Federal Reserve, the US central bank, cannot introduce a digital currency without congressional approval?” Lummis asked Powell.
“Yes, I do,” replied Powell.
In the year As of December 2023, data from Washington, DC shows that 11 countries of the Atlantic Council – mainly in the Caribbean – have initiated CBCCs. Pilot CBCC trials are active in 21 countries, including China's e-Yuan, and 33 are scaling up their CBC implementation.
President Joe Biden signed an executive order in March 2022 urging the Fed to explore a possible CBDC.
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