Powell: No US CBDC, Sticking to Stable Dollar

Federal Reserve Chair Jerome Powell has reiterated the central bank's stance on a central bank digital currency (CBDC), stating that the U.S. will not launch one. In a recent interview, Powell emphasized that the Federal Reserve has no plans to issue a CBDC, as it believes that the current payment systems are functioning well and meet the needs of the public.

The Federal Reserve's position on CBDCs has been consistent over the years. In 2021, Powell testified before the Senate Banking Committee, stating that the Fed was not actively considering the launch of a CBDC. This stance has not changed, as Powell continues to emphasize the importance of maintaining the stability and security of the U.S. dollar in both physical and digital forms.

The Federal Reserve's decision not to launch a CBDC is in contrast to other central banks around the world, which are actively exploring the possibility of issuing their own digital currencies. For example, the People's Bank of China has been testing its digital yuan for several years, while the European Central Bank has been conducting research on a digital euro.

The Federal Reserve's decision not to launch a CBDC is based on several factors. One of the main concerns is the potential for a CBDC to disrupt the existing financial system and the role of commercial banks in providing financial services to consumers and businesses. Additionally, the Federal Reserve is concerned about the potential for a CBDC to be used for illicit activities, such as money laundering and tax evasion.

The Federal Reserve's decision not to launch a CBDC is also influenced by the fact that the U.S. dollar is the world's reserve currency. The U.S. dollar's status as a reserve currency is based on its stability and the strength of the U.S. economy. A CBDC could potentially undermine the U.S. dollar's status as a reserve currency, as other countries may choose to hold digital currencies instead of physical U.S. dollars.

The Federal Reserve's decision not to launch a CBDC is a significant development in the world of central banking. While other central banks are actively exploring the possibility of issuing their own digital currencies, the Federal Reserve has chosen to maintain the status quo. This decision is based on a careful consideration of the potential risks and benefits of a CBDC, as well as a commitment to maintaining the stability and security of the U.S. dollar.