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The Fed has ‘not decided to proceed’ with a digital dollar, says Powell

Jerome Powell, chair of the Federal Reserve, shut down expectations for a U.S. central bank digital currency (CBDC) to be issued in the near future. 

The central bank leader said that the U.S. has “not decided to proceed” with the issuance of a CBDC for the time being.

“We do not see ourselves making that decision for some time,” he said Tuesday, speaking remotely on a panel about the role of central banks in digital markets during a conference in Paris.

Instead, the U.S. central bank will be working in collaboration with Congress and the executive branch to evaluate the policy and the technological issues. 

Powell went on to outline a multi-year period during which the Fed would focus on “building public confidence in our analysis and ultimate conclusions, which we certainly haven’t reached yet.”

Powell did elaborate that, if adopted, a U.S. CBDC would have several key characteristics: intermediated, privacy-protected, identity-verified, and interoperable.

“We would be looking to balance privacy protection with identity verification, which has to be done in today’s traditional banking system as well,” Powell said referring to the discussion paper issued in January this year, where the Federal Reserve took the first step towards a CBDC.

Earlier this month, Federal Reserve Vice Chair Lael Brainard said that the central bank was seeking answers to questions that would determine the need for a CBDC. 

At a New York conference hosted by the Bank Policy Institute, Brainard emphasized that the Fed’s investigation will determine the future financial system infrastructure, but said that a digital dollar  is not “particularly relevant today.”

   

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