Federal Reserve Chair Jerome Powell tried to offer assurances in a Senate hearing that a CBDC wouldn’t be built in the U.S. in a way that gave the government an ability to spy on people.
Powell said the Fed isn’t close to any digital dollar recommendation.
Even if the Federal Reserve were close to recommending a central bank digital currency (CBDC) in the U.S., Chair Jerome Powell told lawmakers that the Fed has zero interest in a system in which it would have a view into user data.
“We’re nowhere near recommending – or let alone adopting – a central bank digital currency in any form,” Powell told the Senate Banking Committee in a hearing Thursday on monetary policy, adding that “people don’t need to worry about it.”
He told the lawmakers that if the Fed ever got closer to building a digital dollar, the banking system would be enlisted to manage people’s accounts.
“If that were a government account, that the government would see all your transactions, that’s just something we would not stand for or do or propose here in the United States,” Powell said. He contrasted the U.S. thinking with China, where the government can track user activity in its digital currency.
Republican politicians, including presidential candidate Donald Trump, have been issuing angry admonitions against what they’ve characterized as a federal government intent to launch CBDCs, despite repeated remarks from U.S. officials that they’re doing nothing more than studying the idea as it spreads through other jurisdictions, including Europe and the U.K. Trump and others have decried the government’s plans for spying on its people’s transactions.
Read More: Donald Trump Vows to ‘Never Allow’ Central Bank Digital Currencies if Elected
“If we were to ever to do something like this – and we’re very long way from even thinking about it – we would do this through the banking system,” Powell said. “The last thing we would want with the Federal Reserve would be to have individual accounts for all Americans, or any Americans for that matter.”
Powell and other officials have said in the past that the central bank will await specific authorizations from Congress and the White House before it would move forward on a digital dollar. In response to a question from Sen. Cynthia Lummis (R-Wyo.) Thursday, he reiterated that position.
“Do you still agree that the Federal Reserve cannot introduce a U.S. central bank digital currency without congressional authorization?” the lawmaker asked.
“Yes, I do,” the central banker responded.
Nikhilesh De contributed reporting.
