Federal Reserve chair Jerome Powell has said that the United States will not be issuing a digital currency for central banks, also known as CBDCs, so long as Powell remains at the helm of the organisation.
This announcement was made during the Senate Banking Committee’s hearing on Tuesday. During the hearing Senator Bernie Moreno, R-OH asked Powell to promise that there would be no CBDC in the United States as long as he is the Federal Reserve System’s head.
“Yes,” Powell Responded
Pic.twitter.com/rKYV5LOiXa In a historic statement, Jerome Powell pledges never to issue another CBDC as long as he remains the Federal Reserve chair. pic.twitter.com/rKYV5LOiXa
— Nick Anthony (@EconWithNick) February 11, 2025
Moreno called Powell's one-word answer important, and said it would prevent the United States from “looking like China” Any way. Powell’s answer contradicts previous statements that suggested the Federal Reserve might create a CBDC.
“For far too long, the Federal Reserve has maintained a legal grey area around the possibility of a U.S. central bank digital currency, or CBDC,” Nicholas Anthony, Cato Institute policy analyst in an email. “Federal Reserve Chair Jerome Powell's commitment to never issue a CBDC is a welcome change of pace. CBDCs present risks to financial freedom, privacy, and markets.”
Unlike Bitcoin, which is decentralized and operates without government control, a CBDC is a digital form of a country's official currency issued and regulated by its central bank. CBDC, backed by the government is digital cash.
CBDCs are referred to as a “surveillance tool” by some critics, because unlike cash they can be tracked. CBDCs in the United States were made a controversial issue by Republican lawmakers who called for an outright ban on government-issued currency.
Donald Trump, the then candidate, promised at the 2024 Bitcoin Conference that, if he was reelected as president, he would direct the Treasury Department to implement the Bitcoin standard. “cease and desist all steps necessary” To create a CBDC.
Other countries have begun to experiment with CBDCs while the United States is debating a digital currency. These include Russia, Turkey and Japan. China began testing its CBDC in 2020, the digital Yuan.
Powell’s pledge not to release a CBDC, as more countries adopt digital currency, highlights the United States divergence with global trends.
Andrew Hayward is the editor