Speaking before the US House of Representatives Financial Services Committee, Powell said, “I think it's something we really need to explore as a country," adding that the prospect of a central bank digital currency "should not be a partisan thing."
"We're doing a great deal of work," he said, noting that once the guidance is completed, it will be the responsibility of Congress to draft legislation that authorizes its implementation in the US financial system.
For years, officials have been pondering the idea of a US government-backed digital currency and weighing its potential risks and be
"It's a very important potential financial innovation that will affect all Americans," Powell said at the meeting. "Our plan is to work on the policy side and the technology side in the coming years and make a recommendation to Congress at some point."
A Digital Dollar Proposal The Federal Reserve has been studying the possibility of a digital dollar since 2017. Earlier this week, Congressman Jim Hymes (D-Ct.) released a proposal on how the United States would issue and implement the Convention on Biological Diversity, claiming it could help preserve The US dollar has its role as the leading reserve currency throughout the global economy.
“The longer the United States government waits to embrace this innovation, the more we will fall behind foreign governments and the private sector,” Hymes said in a press release. "It is time for Congress to consider and move forward with legislation that would legalize the Convention on Biological Diversity for the United States."
When asked by Himes if he had taken a look at the proposal, Powell replied that he had printed it, and had the paper with him, but that he had not yet been able to "read it carefully".
Hems' comments on the US dollar's supremacy mirror those made by Powell earlier this month at a research conference sponsored by the Federal Reserve.
“In light of the massive growth in crypto-assets and stablecoins, the Fed is considering whether a US central bank digital currency will improve upon an already secure and efficient domestic payment system,” Powell said. “As the Federal Reserve White Paper notes on this topic, the US central bank digital currency can also help preserve the international standing of the dollar.”
The Benefits and Risks In May, Federal Reserve Vice Chairman Lyle Brainard remarked on the potential benefits and risks of a US central bank digital currency before the House Committee on Financial Services, noting that its implementation would be feasible.