Nations intensify CBDC efforts while Fed’s Powell alleviates concerns over digital dollar

Federal Reserve Chair Jerome Powell stated that the United States is far from considering or adopting a central bank digital currency (CBDC), and even if it were to do so, the central bank has no interest in a CBDC that surveils users. Powell made these remarks during a hearing before the Senate Committee on Banking, Housing, and Urban Affairs on March 7. In contrast, on the same day, the central bank of Hong Kong announced its renewed efforts to implement a wholesale CBDC, while the BRICS geopolitical bloc reportedly began working on a blockchain-based payments system. Additionally, a central bank official in the Philippines stated that the country’s wholesale CBDC would be completed by the end of the year. Powell also addressed concerns about a retail-focused CBDC enabling surveillance and emphasized China’s digital yuan as an example. However, Powell emphasized that the Fed is a long way from even considering launching a CBDC, and if it were to do so, it would be done through the banking system. He reassured that individual accounts for Americans at the Federal Reserve are not a possibility. Powell reiterated that Congress would need to grant permission for the Fed to create a retail CBDC, a viewpoint he has consistently maintained. According to data from the Atlantic Council, 11 countries, primarily in the Caribbean, have already launched a CBDC, while 21 countries are conducting pilot CBDC trials, including China with its e-yuan. Additionally, 33 countries are still developing their CBDC initiatives. In March 2022, President Joe Biden signed an executive order urging the Fed to explore the possibility of a CBDC.