Federal Reserve Chair Jerome Powell stated that the United States is currently not considering the adoption of a central bank digital currency (CBDC). During a hearing before the Senate Committee on Banking, Housing, and Urban Affairs on March 7, Powell emphasized that the Federal Reserve is far from recommending or adopting a CBDC in any form. This declaration contrasts with recent developments in other countries, such as Hong Kong’s central bank’s push for a wholesale CBDC and the reported efforts of the BRICS geopolitical bloc to develop a blockchain-based payments system. Additionally, a central bank official in the Philippines announced that the country’s wholesale CBDC would be completed by the end of the year.
Addressing concerns about privacy and surveillance, Powell highlighted China’s digital yuan as an example of a retail-focused CBDC that allows for extensive government monitoring of transactions. However, Powell assured that if the Federal Reserve were to launch a CBDC, it would be done through the existing banking system. He emphasized that the Federal Reserve has no intention of creating individual accounts for all Americans and that the current system, where only banks have accounts at the Fed, will remain unchanged.
Powell also reiterated his stance that it is Congress’s responsibility to grant permission for the Federal Reserve to develop a retail CBDC. Senator Cynthia Lummis expressed concerns about the Fed creating a CBDC without legislative authorization, to which Powell agreed that the Federal Reserve cannot introduce a U.S. CBDC without congressional approval.
As of December 2023, data from the Atlantic Council shows that 11 countries, mostly in the Caribbean, have already launched a CBDC, while 21 countries are conducting pilot CBDC trials, including China with its e-yuan. An additional 33 countries are in the process of developing their CBDC implementations.
In March 2022, President Joe Biden signed an executive order urging the Federal Reserve to explore the possibility of a CBDC. However, lawmakers’ apprehension and uncertainty regarding cryptocurrencies have contributed to proposed crypto regulations in the United States.