Fed Chairman Powell Reveals The US Is ‘Working Hard’ On A Digital Dollar

  • Federal Reserve Chairman Jerome Powell discloses that the US is indeed working on a central bank digital currency
  • Facebooks’ Libra, he said was what “lit a fire” under its work towards the digital dollar

Federal Reserve Chairman Jerome Powell revealed in his testimony before Congress that the US was “working hard” on its own digital currency. On Tuesday, Powell appeared before the House Committee on Finance Services as part of his semiannual testimony to Congress at about 10 am ET.

In December, Steven Mnuchin, the US Treasury Secretary said that he and Powell have discussed the digital dollar “at length” and don’t see a need in the near future, at least in the next five years.

Now, when Rep. Bill Foster of Illinois asked him about the progress made on central bank digital currencies (CBDC), he said,

“We’re working hard on it, we have a lot of projects going on, lot of efforts going on on that right now.”

They talked about the viability of this digital currency and the competition the Fed would face from other central banks especially China and private companies like Facebook. While being asked about China's digital yuan, Powell made the case for private currencies, saying,

“A ledger where you know everybody's payments is not something that would be particularly attractive in the context of the US.”

Facebook’s Libra was a Wake-Up call for the Fed

Powell acknowledged that the social media giant rolling out its own so-called digital currency Libra was what “really lit a fire” under the central bank's move towards CBDC. Powell said,

“It was a bit of a wakeup call that this is coming fast, and could come in a way that is quite, you know, widespread and systemically important fairly quickly if you use one of these big tech networks like Libra did.”

However, the Fed has not decided to create the digital dollar yet as there are still many questions needed to be answered first. Powell pointed out that the issues revolve around privacy, cybersecurity, among many operational ones. The Fed, he said is working through these issues “thoroughly and responsibly.”

This big announcement had bitcoin's price surging past $10,000 yet again, going to $10,383 level. Apart from this big announcement, Powell also talked about interest rates and keeping the rate cuts on hold following the three cuts in 2019. He said,

“The central bank is also watching development regarding the coronavirus and its impact on global growth.”

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