Testifying before the Senate Banking Committee today, Federal Reserve Chairman Jerome Powell said that he is “legitimately undecided about whether the benefits outweigh the costs” of creating a central bank digital currency. He emphasized that should the central bank decide to move forward with a CBDC, “we would want very broad support in society and in Congress.”
“Ideally, that would take the form of authorizing legislation, as opposed to a very careful reading of ambiguous law to support this,” Powell said. “It’s a very important initiative and I do think we should ideally get authorization.” He added that the Fed is currently working to “explore both the technology and the policy issues over the next couple of years . . . so that we’re in the position to make an informed recommendation.”
During testimony before the House Financial Services Committee yesterday, Powell said the Fed is at a “critical point” in its deliberations over whether and how to offer a CBDC, and signaled that the agency would publish a report “around early September” on CBDs and other digital payments.
He also discussed the potential for regulating stablecoins under a framework similar to those that apply to bank deposits or money market funds. “We have a tradition in this country where the public’s money is held in what is supposed to be a very safe asset,” Powell told House lawmakers on Wednesday. “We have a strong regulatory framework around bank deposits or money market funds . . . that doesn’t exist for stablecoins. If they are going to be a significant part of the payments universe . . . then we need an appropriate regulatory framework, which, frankly, we don’t have.”
