US Federal Reserve Chair Jerome Powell told lawmakers that the regulator remains far from adopting or even recommending a central bank digital currency (CBDC).
Powell made the statement during a March 7 Senate Banking Committee hearing on monetary policy.
The Fed chair’s testimony aimed to quell fears over privacy concerns, emphasizing that the Federal Reserve would not engage in creating a system that allows government surveillance of American citizens’ transactions.
Upholding privacy
Addressing the Senate, Powell stressed the Fed’s current stance on the digital dollar concept, highlighting that the US is far from moving forward with any form of CBDC. The statement comes amid growing discussions globally about the potential and implications of digital currencies issued by central banks.
Contrary to some international approaches where government tracking of digital currency transactions is possible, Powell assured lawmakers that the Fed would prioritize privacy.
He stated:
“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.”
The notion of a US CBDC has sparked debate among politicians and the public alike, with concerns often centered around privacy and government surveillance.
Republican figures, including presidential candidate Donald Trump, have vocally criticized the potential for a federal government-run digital currency to infringe on personal privacy.
Powell’s remarks directly counter these fears, indicating a clear stance against a system that would enable any form of spying on Americans.
Congressional authorization
Powell elaborated on the operational aspects, noting that if the Fed ever moves forward with a CBDC, it would integrate the banking system to manage accounts, thereby avoiding direct government access to individual transaction data.
This approach is designed to maintain the integrity of personal financial activities, ensuring they remain within the purview of private banking institutions rather than under governmental surveillance.
Powell also reinforced the importance of legislative approval for any CBDC initiative as it is committed to lawful and transparent governance. Responding to Senator Cynthia Lummis, he confirmed that the regulator would seek explicit authorization from Congress and the Executive Branch before proceeding with a digital dollar.
The Fed’s cautious and measured approach to the idea of a digital dollar reflects a broader consideration of the implications such a currency might have on privacy, monetary policy, and the banking system.
The Fed’s cautious and privacy-focused stance on a potential US CBDC marks a critical moment in the ongoing global dialogue on digital currencies. As Powell made clear, any future developments will be meticulously aligned with American values of privacy and freedom, ensuring that the financial sovereignty of U.S. citizens remains uncompromised in the digital age.
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- Source: https://cryptoslate.com/fed-chair-powell-confirms-regulator-has-no-plans-to-recommend-adopt-cbdcs/
