Federal Reserve Chairman Jerome Powell expressed skepticism toward a possible Fed central bank digital currency (CBDC) during today’s Financial Services Committee hearing in the U.S. House of Representatives. Powell was there to deliver his latest report on monetary policy, Yahoo Finance reports.
Powell’s comments about digital currency came in response to questions from Illinois Democrat Bill Foster, who had asked him the Fed Chairman to respond to Fed Governor Lael Brainard’s recent remarks about a possible CBDC. According to Powell, there are no serious plans to move away from the dollar in its current form:
“Having a single government currency at the heart of the financial system is something that has served us well. It’s a very, very basic thing, it really hasn’t been in question, and I think before we move away from that, we should really understand what we’re doing. Preserving the centrality of a central, widely accepted currency that is accepted and trusted is an enormously important thing.”
Powell did acknowledge, however, that central banks around the globe are currently racing to explore the technology and reminded the representatives that the Fed is also examining CBDC risks and benefits.
When the topic turned to China’s digital yuan plans, Powell was more direct. After noting that the Federal Reserve does have insight into China’s current activities in the digital currency realm, Powell noted that the Chinese are operating in an entirely different environment:
“But they’re in a completely different institutional context. For example, the idea of having a ledger where you know everybody’s payments, that’s not something that would be particularly attractive in the United States context. It’s not a problem in China.”
The Fed Chairman also gave credit to Facebook’s Libra project for generating a worldwide conversation about digital currencies, CBDCs, and stablecoins.