Fed Chair Powell Issues Written Response on the US Dollar and the Digital Currency Race

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Federal Reserve Chairman Jerome Powell has responded to lawmakers who have urged him to consider issuing a digital US dollar.

In a letter to Congress this week, Powell appears to weigh the pros and cons. He says he is both exploring the idea of a central bank digital currency (CBDC), although the Fed is not currently developing a CBDC, while also stating that he does not see the distinct advantages such a currency would have in the United States.

Two US Congressmen, French Hill and Bill Foster, wrote a letter in September urging the Fed to consider creating a national digital currency as the rise of crypto and projects like Facebook’s Libra threaten paper money.

They join a chorus of policymakers, including Philadelphia Federal Reserve Bank President Patrick Harker; former Chair of the Commodity Futures Trading Commission, J. Christopher Giancarlo, (CFTC); and former Chief Innovation Officer of the CFTC, Daniel Gorfine, who believe that the US government needs to consider a digital dollar – or risk getting left behind.

Writes Powell,

“The Federal Reserve is not currently developing a U.S. dollar central bank digital currency (CBDC), but continues to carefully evaluate the costs and benefits of issuing a general purpose CBDC, defined as a new type of Federal Reserve liability that could be held directly by households and businesses.”