Fed Chair Jerome Powell Says CBDCs Must Coexist With Cash

  • The Bank of International Settlements and the Fed have been assessing the feasibility of CBDCs.
  • Powell said the research showed that CBDCs need to coexist with cash to create an innovative payment system.
Federal Reserve chairman Jerome Powell

Federal Reserve chairman Jerome Powell speaking at a Brookings panel, “Are there structural issues in U.S. bond markets?”, 3 August 2015. Brookings Institution

Powell was addressing attendees at a conference hosted by the Committee on Payments and Market Infrastructures in Based, Switzerland. He said that improving the global payments system is only possible through the combined engagement of policymakers, private-sector participants, and academia.

He also addressed central bank digital currencies, a hot topic in the world of global payments. While he previously noted that a digital dollar is a “high priority” project for the United States, he said that the country wasn’t in a rush to create one.

Nonetheless, the Bank of International Settlements and a group of seven central banks, which includes the U.S. Federal Reserve, recently accessed the feasibility of central bank digital currencies (CBDCs) in helping central banks deliver their public policy objectives.

One of the three key principles highlighted in the report is that a central bank digital currency needs to coexist with cash and other types of money in a “flexible and innovative payment system.”

With the COVID-19 crisis highlighting the issues of the current payment systems, the Federal Reserve’s board of governors has been conducting “experiments” with CBDCs. According to Powell, the Federal Reserve Bank of Boston has been collaborating with MIT researchers to explore digital currencies.

Discussion
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