The Federal Reserve is “looking very carefully” at whether and how it might issue a digital dollar, Fed Chairman Jerome Powell told members of Congress today. In testimony before the Senate Banking Committee, Powell noted that it is “something we are investing time and labor in across the Federal Reserve System,” and that as the world’s reserve currency, “we have a responsibility to get this right.”
Powell pointed out that “there are significant technical and policy questions” that the central bank is considering, and that the Fed is “committed to solving the technology problems and consulting very broadly with the public and very transparently with all interested constituencies as to whether we should do this.”
He also noted that the Fed would carefully weigh potential benefits of a digital dollar—such as helping to promote financial inclusion—against potential implications for the banking system. “You want to avoid creating things that might be destabilizing or draw funds away from the banking system,” Powell said. “We have a banking system that intermediates between savers and borrowers. We want to be careful about what the implications are.”
Among other things, Powell also discussed climate change and shared his views on whether standardized climate-related disclosures may be appropriate. Powell acknowledged that “financial institutions everywhere . . . are working hard on this question.” Regarding the voluntary and variable nature of current climate disclosures, Powell said that “it’s appropriate to allow some of that difference to persist for now,” but signaled that “in the long run, we have to be going in the direction of more standardization.”
