Federal Reserve Chairman Powell confirmed that regulators have no plans to recommend or adopt CBDCs.

U.S. Federal Reserve Chairman Jerome Powell told lawmakers that regulators are still far from adopting or encouraging central bank digital currencies (CBDCs).

Powell said at a March 7 Senate Banking Committee hearing on monetary policy:

The Federal Reserve chairman’s testimony aimed to soothe concerns about privacy issues and emphasized that the Fed would not be involved in creating a system that would allow government surveillance of the transactions of American citizens.

Privacy

Speaking on the Senate floor, Powell highlighted the Federal Reserve’s current stance on the concept of a digital dollar, emphasizing that the United States is not making progress with any form of CBDC. The statement comes amid growing discussion around the world about the potential and implications of central bank-issued digital currencies.

Unlike some international approaches that allow governments to track digital currency transactions, Powell assured lawmakers that the Fed will prioritize privacy.

He said:

“If it’s a government account, that the government is going to see all your transactions is something we are not advocating or practicing or suggesting here in the United States.”

The concept of a U.S. CBDC has sparked debate among politicians and the public, often centered around concerns about privacy and government surveillance.

Republican figures, including presidential candidate Donald Trump, have vocally criticized digital currencies operated by the federal government for their potential to infringe on personal privacy.

Powell’s comments directly address these concerns and represent a clear stance against systems that enable any form of surveillance of Americans.

Congressional approval

Powell elaborated on the operational aspects, noting that if the Federal Reserve were to pursue a CBDC, it would integrate banking systems to manage accounts, thereby avoiding direct government access to individual transaction data.

This approach is designed to maintain the integrity of personal financial activities, ensuring they remain within the purview of private financial institutions and not under government surveillance.

Powell also emphasized the importance of legislative approval for any CBDC initiative as it strives for legal and transparent governance. He responded to Senator Cynthia Lummis, confirming that regulators would seek explicit approval from Congress and the administration before moving forward with a digital dollar.

The Federal Reserve’s cautious and cautious approach to the concept of a digital dollar reflects broader considerations about the impact such a currency could have on privacy, monetary policy and the banking system.

The Federal Reserve’s cautious, privacy-focused stance on a potential U.S. CBDC marks an important moment in the ongoing global conversation about digital currencies. As Chairman Powell made clear, all future developments will be carefully aligned with American values ​​of privacy and freedom to ensure that the financial sovereignty of American citizens is not compromised in the digital age.