Powell pledges no digital dollar under his Fed leadership

Federal Reserve Chair Jerome Powell has assured U.S. lawmakers that the Federal Reserve will not issue a central bank digital currency (CBDC) during his tenure.

Powell's term is scheduled to end in May 2026.

During a Senate Banking Committee meeting on February 11, 2025, Powell responded to a question from Ohio Senator Bernie Moreno, confirming that the Fed would not issue a CBDC while he is in charge.

Moreno had previously asked Powell to kibosh any possibility of the Fed launching its own electronic currency.

Powell's firm stance aligns with the views of Republican lawmakers who have been actively working to prevent the release of a U.S. dollar-pegged CBDC.

Powell's recent comments mark a departure from previous considerations, during which the Federal Reserve explored the potential benefits of a digital dollar.

The Fed has been studying the idea of launching its own electronic version of the dollar, which could allow people to make instant payments.

Critics of CBDCs, such as the Cato Institute’s Nicholas Anthony, have praised Powell’s commitment, citing potential risks to financial freedom, privacy, and market stability.

Unlike decentralised cryptocurrencies like Bitcoin (CRYPTO:BTC), a CBDC would be government-issued and regulated, raising concerns about surveillance due to its trackable nature.

While Powell shut down the possibility of a CBDC being launched at least until the end of his term, the Federal Reserve has introduced its FedNow payment system, which addresses several issues that a Fed-backed digital currency would aim to resolve.

Senator Moreno encouraged Powell to continue advancing the FedNow initiative to facilitate round-the-clock money transfers more broadly.