Jerome Powell: Digital dollar cannot be issued without regulatory approval

The chairman of the US Federal Reserve said that Congress should seek guidance from the Fed before implementing a central bank digital currency.

Jerome Powell testified before the US House of Representatives Financial Services Committee. Before the launch of the digital dollar, the Fed needs to study everything carefully, as this will significantly affect the financial system:

“This is a potentially very important financial innovation that will affect all Americans. Our plan is to work on both the political and technological side of the issue in the coming years. And then present their recommendations to Congress.”

According to the official, the introduction of the digital dollar will provide the citizens of the country with the experience of conducting financial transactions using digital currencies. The Fed has a lot of work to do, Powell warned.

One of the key challenges is to see if a central bank digital currency will improve the already existing secure and efficient domestic payment system, Powell says. Potentially, the digital dollar can maintain the international dominance of the dollar, but the Fed analysts cannot yet give an accurate forecast.

Recall that the Fed has been considering the prospects for introducing a sovereign digital currency since 2017 and, according to Congressman Jim Himes, the longer the US government waits before making a decision, the more the United States lags behind other countries. The congressman called for the law to be passed as soon as possible.

Deutsche Bank Chief Economist Matt Luzzetti said earlier that the Fed’s aggressive actions would accelerate the economic recession in the US.