Yesterday, testifying in front of the Senate Banking Committee, Jerome Powell, Chair of the US Federal Reserve, was asked several questions about a digital dollar or Central Bank Digital Currency (CBDC).
Powell first pointed to the fact that most transactions are digital today as consumers and businesses manage transfers and payments digitally, not with physical dollars. Powell told the Committee they were nowhere close to issuing a CBDC and expressed his understanding of the privacy concerns. Powell appeared to indicate that if CBDC were ever a reality, digital dollar accounts would only ever be available for financial institutions (a concern of commercial banks).
Powell also reaffirmed that only an act of Congress could approve a CBDC, to the relief of some Senators on the Committee.
The Federal Reserve has been researching CBDCs, similar to what some other jurisdictions are doing. China is already testing a digital yuan with consumers. Chinese officials have also expressed their interest in leveraging other benefits of issuing a CBDC, such as consumer monitoring or influence.