Fed chair says it's up to Congress to bring a digital dollar to market

Federal Reserve Chair Jerome Powell said 2021 will likely have the central bank engaging with the public and lawmakers regarding the digital dollar.

In a House Financial Services Committee hearing today, Powell responded to questions from Rep. Patrick McHenry, who said the digital dollar would likely face national and economic security issues for the United States. Powell said there were many concerns surrounding the project and the Fed intended to reach out to the public.

“This is going to be the year in which we engage with the public pretty actively, including some public events that we’re working on,” he said. “In the meantime, we’re working on the technical challenges and also collaborating and sharing work with the other central banks around the world that are doing this.”

Powell added that the Fed needed to consider the health of other markets when creating a digital dollar, adding that the project may need to go to lawmakers first:

“We could well need legislative authorization for such a thing. It isn’t clear until we see which way we’re going.”

The Fed chair’s remarks come on the heels of his appearance before the Senate Banking Committee yesterday, in which he said the Fed was “looking carefully” at whether the U.S. should roll out a digital dollar, but also that it was unlikely for stablecoins and digital currencies to affect monetary policy transmission. President of the Dallas Federal Reserve Robert Kaplan has also said that it is “critical that the Fed focuses on developing a digital currency.”

In the meantime, the Federal Reserve faced another technical challenge today, as nearly all of the services it provides through its online portal went offline for more than an hour. At the time of publication, all Federal Reserve Bank Services with the exception of Account Services are now back online.