Federal Reserve Maintains No-CBDC Stance Under Powell's Leadership

By: Eliza Bennet

Federal Reserve Chair Jerome Powell has made it clear that the United States will not create a central bank digital currency (CBDC) as long as he remains at the helm. Speaking at the Semiannual Monetary Policy Report to Congress, Powell addressed concerns regarding a potential CBDC, confirming to Senator Bernie Moreno and others in attendance that such a development is not on the Federal Reserve's agenda.

The confirmation from Powell comes in response to concerns echoed by Senator Moreno, who suggested the risk of the US emulating China by advancing towards a CBDC. In response, Moreno expressed appreciation for Powell’s assurances, highlighting the significance of maintaining the current monetary structure without delving into untested digital frameworks.

In addition to Powell's remarks, Federal Reserve Governor Christopher Waller recently articulated skepticism surrounding the necessity of a CBDC within the United States payment ecosystem. During the 2024 Annual Conference organized by The Clearing House, Waller questioned the potential efficacy of a CBDC in addressing existing market inefficiencies. He has remained unconvinced by arguments favoring its implementation since 2021 and emphasized the importance of market-driven solutions over governmental interference.

Powell and Waller both highlighted the role of innovation driven by the private sector, insisting that it's crucial for the government to support, rather than compete with, private advancements unless an irrefutable need for intervention surfaces. This stance underlines the Federal Reserve's cautious approach to CBDCs, with Powell and his team advocating for the existing financial and monetary system to prioritize private sector-led innovation.