- Jerome Powell, head of the Federal Reserve, has warned that many “subtle and difficult” choices exist with regard to a digital dollar
- Powell added that work was being done to evaluate the theoretical and practical requirements of a U.S. CBDC
- Commentators have warned that China’s progress in the CBDC arena could harm the dollar
The head of the federal reserve, Jerome Powell, has warned that many “subtle and difficult” choices exist with the concept of a digital dollar and that no decision has yet been taken on it. In a recent interview with CBS’s 60 Minutes, Powell did say that the Fed is working hard on researching a Central Bank Digital Currency (CBDC) and is running a number of tests to see how exactly a digital dollar might work, but the public and congress would need to be heavily involved in any final decision.
Digital Dollar Slipping Further Behind
The concept of a digital dollar was first mooted in early 2020, since when other countries have taken up the CBDC baton, most notably China, who are conducting real world tests of their digital yuan.
China is helped by its authoritarian governance system and the fact it is already a heavily cash-free country, whereas the U.S. is still wedded to the idea of paper money, making the transition harder.
Powell Not Concerned Over China Threat
Speaking on 60 Minutes, Powell said that while the Fed and other agencies are investigating a digital dollar, “There are many subtle and difficult policy choices and design choices that you have to make.” He also added that the U.S. is looking closely at developments in China, but did not share any concerns over them.
This is in contrast to the views of some commentators who have warned that if the U.S. lags behind in the CBDC race it could spell the end for the dollar’s hegemony.