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On Tuesday, Fed Chair Jerome Powell stated that the US central bank will not introduce a central bank digital currency (CBDC) during his time in office.
This declaration concluded years of speculation that the Fed might follow China’s example by launching an official digital currency.
During the Fed’s semiannual testimony, Powell responded to a question from Sen. Bernie Moreno (R-Ohio), confirming that the US would refrain from implementing a CBDC as long as he remains chairman. Powell’s response was affirmative.
JUST IN:
Fed Chair Powell commits to never creating a central bank digital currency (CBDC). pic.twitter.com/sGkf9oK7qT
— Bitcoin Journal (@BitcoinMagazine) February 11, 2025
CBDC Analysis Fails to Establish a Specific Requirement
For at least four years, the Fed has actively investigated the concept of a CBDC, culminating in a comprehensive 2022 study that evaluated both its potential advantages and disadvantages without reaching a definitive conclusion. During this time, numerous officials expressed concerns, often agreeing that a CBDC is unnecessary while emphasizing privacy issues among other considerations.
Additionally, the intricacies of implementing such a system, ongoing policy discussions regarding privacy versus surveillance, the effectiveness of the current US payment infrastructure, and legal challenges concerning the Fed’s authority to create a CBDC without Congressional approval all argue against its introduction.
In the meantime, the Fed has launched the FedNow payment system, which addresses many of the same challenges a CBDC would tackle. Furthermore, during his testimony, Sen. Bernie Moreno encouraged Powell to expand the availability of 24-hour money transfers through FedNow.
Powell to Serve Until 2026, Defying Calls for an Early Exit
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As discussions surrounding US monetary policy intensify, it is important to note that Powell continues to lead the Fed. He was initially appointed by President Donald Trump in 2017 and is currently serving a term that extends through May 2026.
Despite their public disagreements—particularly regarding interest rate decisions—President Joe Biden reappointed Powell for a second term in 2021.
Although Trump has previously expressed frustration with Powell’s policies, he recently indicated that he would not attempt to replace him, stating that Powell would not resign quietly.
In November, Powell asserted that he would not leave his position early if Trump attempted to remove him, noting that the law prohibits the early dismissal of any Fed governor before their term concludes.
Powell and Trump United in Rejecting CBDCs
Nonetheless, both Powell and Trump are aligned in their opposition to a CBDC. Recently, Trump signed an executive order prohibiting its creation.
The order specifies: “Except to the extent required by law, any ongoing plans or initiatives at any agency related to the creation of a CBDC within the jurisdiction of the US shall be immediately terminated, and no further actions may be taken to develop or implement such plans or initiatives.”
Trump has consistently criticized CBDCs, arguing that they could grant the government complete control over personal finances.
The post Fed Chair Powell Vows No US CBDC During His Tenure appeared first on Cryptonews.
