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

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.”