Chair Jerome Powell informed legislators on Thursday that the Federal Reserve is “nowhere near” establishing a digital currency as a central bank or even making a recommendation on the matter.
In his testimony on Thursday before the Senate Banking Committee, Federal Reserve Chair Jerome Powell stated that the banking system would be used if the central bank decided to implement a CBDC.
“The last thing we would want — we, the Federal Reserve, would want — would be to have individual accounts for all Americans, or any Americans for that matter,” Powell stated. “Only banks have accounts at the Fed and that’s the way we’re going to keep it.”
Powell continued that people shouldn’t be concerned about digital currency issued by central banks. Nothing like that is even close to happening anytime soon.
Republicans have expressed worries that a CBDC would make it easier for the government to monitor citizens’ transactions. According to the Atlantic Council, 98 percent of the world’s GDP, or 130 countries, are now investigating CBDCs in some capacity. The US is included in that statistic.
Central bank authorities have previously rejected the idea of a CBDC, despite the Federal Reserve’s exploration of the concept and publication of a report last year weighing its benefits and drawbacks. Powell has also stated that without congressional permission, the Fed will not issue a CBDC.
The Wyoming senator, Cynthia Lummis, questioned Powell on Thursday to clarify his position. “Do you still agree that the Federal Reserve cannot introduce a U.S. central bank digital currency without congressional authorization,” questioned Lummis.
“Yes, I do,” Powell responded.
“That just really calms people’s fears. The people are concerned that we could end up with something like the digital yuan that is used as a means of surveillance, so I think that that will calm some of those discussions down,” Lummis said.
For some time now, conservative lawmakers have been opposing a CBDC, claiming that it would give the government the power to monitor financial activities. A statute prohibiting the implementation of a federal CBDC in the Sunshine State was passed into law by Florida Governor and previous presidential contender Ron DeSantis last year.
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