US Far from Adopting CBDC, Expresses Privacy Concerns: Fed Chair Jerome Powell
Summary:
Federal Reserve Chair Jerome Powell stated that the United States is not near the point of adopting a central bank digital currency (CBDC) and expressed concerns about potential user surveillance tied to such currency. Powell emphasized that CBDCs would be administered through the banking system, and not via individual accounts for citizens. He added that implementing retail CBDC would require congressional approval. Meanwhile, data shows numerous countries - primarily in the Caribbean - have launched CBDCs, and others including China are testing them, while 33 countries are developing their CBDC plans.
Jerome Powell, Chairman of the Federal Reserve, has made it clear that the United States isn't close to adopting a central bank digital currency (CBDC), and doesn't have any interest in one that might entail user surveillance. He revealed this during a Senate Committee hearing on Banking, Housing, and Urban Affairs on March 7. His comments were made on the same day that Hong Kong's central bank announced its new initiative for a wholesale CBDC, and not long after the BRICS regional bloc reportedly began work on a blockchain-based payment system. On March 6, a representative from the Philippine central bank stated that the nation's wholesale CBDC would be finalized by year's end.
In the hearing, Powell also discussed potential privacy concerns associated with a consumer-oriented CBDC, including the possibility of government transaction tracking, citing China's digital yuan as an example. He emphasized that such a situation wouldn't be tolerated or proposed in the U.S. He also mentioned that if a CBDC were to be launched by the Fed—an idea currently far from consideration—it would be done through the banking system. Powell firmly noted that the Federal Reserve would never want individual accounts for American citizens.
Currently, only banks have accounts with the Fed, and this will continue to be the trend, according to Powell. Furthermore, he attempted to allay fears about a CBDC, assuring that this concept wasn't on the horizon anytime soon.
Powell has repeatedly stated that Congressional approval would be required to introduce a retail CBDC. This viewpoint was reiterated during the Senate committee hearing.
Multiple countries are pursuing CBDCs, as proven by December 2023 data from Washington D.C. think tank the Atlantic Council. So far, 11 mostly Caribbean countries have introduced a CBDC whereas 21 countries, including China with its e-yuan, are involved in active pilot CBDC trials. An additional 33 countries are still refining their CBDC plans.
In March 2022, President Joe Biden signed an executive order asking the Fed to investigate the potential of a CBDC.
Published At
3/8/2024 4:53:22 AM
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