Federal Reserve is “Nowhere Near” Creating CBDC

By Mark Hunter

19 hours agoFri Mar 08 2024 08:24:51

Federal-Reserve-is-_Nowhere-Near_-Creating-CBDC

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  • Jerome Powell assured senators in a recent Senate hearing that a US CBDC would enable government surveillance
  • Powell explicitly stated the Fed isn’t close to recommending a digital dollar
  • The US is proceeding cautiously on CBDC development due to challenges in transitioning a society still reliant on paper money

Federal Reserve Chair Jerome Powell made robust assertions during a Senate hearing yesterday where he assured senators that any United States Central Bank Digital Currency (CBDC) would allow for government surveillance. Powell firmly rejected the notion of data visibility and also explicitly stated that the Fed is not nearing any recommendation regarding a digital dollar. Whereas other countries are making strides in their development of CBDCs, the US is notably taking a slow and careful approach, noting the difficulties in selling the concept to a country that is still a heavy user of paper money.

Privacy Tops List of Concerns

Powell was attending the Semiannual Monetary Policy Report to the Congress where he vehemently opposed the idea of government intrusion into individual transactions, drawing a sharp contrast between the intentions of the United States and China’s digital currency tracking practices.

To aid his claim he underscored that in the event of progress on a digital dollar, the responsibility of managing accounts would fall upon banking institutions, not the government.

Concerns over privacy led four politicians to introduce the ECASH bill in 2022, whose electronic dollar would be a cross between a traditional physical dollar and a cryptocurrency, where the coin would be digital but would be the sole preserve of the owner, with no influence, or tracking, by any authorities.

This means that transactions will not be monitored, allowing users to use and spend their money like cash but with the convenience of having it on their phone, with no additional checks over what banks currently carry out applied.

Digital Dollar Still Some Way Off

Following criticisms from Republican figures, notably including Donald Trump, Powell reiterated that the US remains solely in the exploration phase regarding CBDCs, a stance that hasn’t shifted in three years.

Powell said that the Federal Reserve is “nowhere near recommending – or let alone adopting – a central bank digital currency in any form,” and tried to allay concerns within the Senate Banking Committee that the Fed is making progress behind closed doors.

Powell emphasized the importance of congressional authorization for the implementation of a digital dollar, saying that any CBDC would be developed “through the banking system”

and reiterated the Fed’s stance on the necessity of congressional approval for any potential CBDC introduction:

Our priority is ensuring that Congress and the White House provide specific authorizations before any further steps are taken.

In 2021, Powell told CBS’s 60 Minutes that many “subtle and difficult” choices exist with the concept of a digital dollar, and it seems that the situation hasn’t moved much in the past three years.