Jerome Powell, chairman of the Federal Reserve, stated on Tuesday that the US central bank should collaborate with Congress to develop a digital dollar.
Powell told the Senate Banking Committee that while existing laws governing the Fed’s activities could serve as a foundation for issuing a digitized version of the US dollar, he preferred to work on a legislation-backed push instead. Senator Pat Toomey of Pennsylvania raised the possibility of a central bank digital currency during questioning.
“Because this is such a fundamental issue, I believe it would be ‘ideal’ if it were the result of broad consultation and ultimately authorizing legislation from Congress,” Powell said.
Powell stated earlier this year that he believed Congressional authorization might be required, but his remarks on Tuesday indicate that he would welcome such involvement. In May, Vice Chairman for Supervision Randal Quarles told the same committee that future Fed work on a digital dollar would require congressional approval.
What shape a Fed-led digital dollar might take, if it ever materializes, remains to be seen, though the Boston Fed branch is currently working on prototype digital dollar applications with the Massachusetts Institute of Technology. Some of the process’s outcomes are expected to be made public before the end of the year.