Powell Says Fed Plans Recommendation to Congress on CBDC

Federal Reserve Chairman Jerome Powell said that the U.S. central bank plans to recommend to Congress how to advance a potential central bank digital currency (CBDC).

When asked about the Fed’s next steps regarding the rollout of a CBDC, Powell told U.S. lawmakers in a Thursday monetary-policy hearing that “it's something we really need to explore as a country” and that “it should not be a partisan thing.”

“It's a very important potential financial innovation that will affect all Americans,” he said. “Our plan is to work on both the policy side and the technological side in coming years and come to Congress with a recommendation at some point.”

The Fed issued a report on the question of a digital dollar earlier this year, and officials are still combing through the responses from the crypto industry, traditional financial firms and investors. Those answers are likely to inform the Fed's eventual recommendation.

In March, Powell said that the Fed wouldn't continue exploring the launch of a CBDC without congressional intervention.

On Thursday, he noted that if the U.S, were to roll out a digital dollar, it would have to be issued by the government rather than by a private company.

“One question around CBDCs is do we want a private stablecoin to wind up being the digital dollar? I think the answer is no,” he said. “If we're going to have a digital dollar, it should be government-guaranteed money, not private money.”

Powell testified before the U.S. House Committee on Financial Services as part of the central bank’s semiannual monetary policy report to Congress.

During his first hearing on Wednesday, Powell called for a better regulatory framework for crypto.