Fed Chairman Jerome Powell didn’t want to say anything about the progress toward a digital dollar.
The Fed is studying “very carefully” on whether to develop a digital dollar, Chairman Jerome Powell says.
This morning, Powell made comments during the Federal Reserve’s semiannual report to the Senate Banking Committee.
“We are looking carefully—very carefully—at the question of whether we should issue a digital dollar,” he said. “And it’s something that central banks around the world are looking at.”
He added: “There are significant both technical and policy questions to do with how we would go about doing that. I would say that we’re committed to solving the technology problems, and to consulting very broadly with the public, and very transparently with all interested constituencies as to whether we should do this.”
The question if the Fed might be implementing a so-called digital dollar had been up in the air for quite some time. A digital dollar will be a type of CBDC, or Central Bank Digital Currency, that is issued and controlled by the state. It will not basically involve a blockchain-based payments system, although some CBDCs will.
Powell has given journalists different versions of this “looking carefully” line before. “There’s a lot of work to be done,” he said of the digital dollar last November.
As Powell elaborates, many central banks in the world are looking into the same ideas. China had already begun launching a digital Yuan, and countries like France, Japan, and the UK are now actively researching their own versions of digital currency. Last January, Powell stated that he was working on coming up with regulatory answers for some of the non-US digital currencies.
He added this morning that the economy is still has a “long way” from the Fed’s recovery goals and that he intends to keep interest rates low for quite a while. The Fed has lowered the interest rates to zero in March of last year as a response to Covid-19, this indicates that the Fed believes things are still very much in need of a boost.
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