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During a recent Senate Banking, Housing, and Urban Affairs Committee hearing, Federal Reserve Chair Jerome Powell made a clear statement regarding the central bank’s stance on digital currencies. He confirmed that the Federal Reserve will not pursue the development of its own digital currency while he remains in his current position.
This announcement effectively closes the door on years of speculation about whether the Fed would initiate a digital currency project, a move already seen in other countries including China, which has been actively promoting its own cryptocurrency initiatives. Powell’s definitive response came in reply to Senator Bernie Moreno, R-Ohio, who sought assurance during the chair’s semiannual monetary policy testimony.
Moreno asked, “Can I have your commitment that as long as you’re the chairman of the Federal Reserve system that we will never have a central bank digital currency?” To which Powell replied with a straightforward “Yes.” Moreno expressed his gratitude for this statement, highlighting its significance in the ongoing national conversation about the potential adoption of digital currencies.
Powell’s current term as the Federal Reserve’s chairman is set to conclude in May 2026. The central bank has been evaluating the implications of a digital currency for over four years, culminating in a comprehensive study released in 2022. This study examined both the benefits and drawbacks of a central bank digital currency (CBDC) but stopped short of reaching any decisive conclusion.
A variety of officials have expressed skepticism about the necessity of a CBDC, emphasizing concerns related to privacy and the potential impact on the financial system. Powell has also pointed out that realizing a CBDC would require legislative approval from Congress, which appears less feasible given the Republican majority in both chambers of government.
While the debate over digital currency continues, the Federal Reserve has made strides in enhancing its payments infrastructure with the introduction of the FedNow payments system. This initiative aims to address many of the issues that a CBDC could potentially solve, thereby leveraging technology to expedite money transfers and improve the overall payments landscape.
During the hearing, Senator Moreno encouraged Powell to further develop the FedNow system to ensure the availability of 24-hour money transfers, underscoring the demand for more efficient digital payment solutions.
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