Federal Reserve Chairman Jerome Powell called the development of a U.S. central bank digital currency (CBDC) “critical work,” telling Senate Banking Committee ranking member Sen. Pat Toomey (R-Pa.) that “broad consultation and, ultimately, authorizing legislation from Congress” would be “ideal.”
A two-and-a-half hour committee hearing intended to discuss the CARES Act – the $2.2 trillion economic stimulus package signed into law by then-President Donald Trump in March 2020 – became heated as committee members debated the upcoming vote to raise the debt ceiling, which Treasury Secretary Janet Yellen has said had to be done by Oct. 18 for the U.S. government to avoid a default on its existing legal obligations, including Social Security benefits and military salaries.
Powell endorsed Congress passing legislation that would authorize a digital dollar, responding to a question from Toomey about whether such legislation was needed.
Toomey was the only lawmaker to ask cryptocurrency-related questions, telling the Fed chair the U.S. central bank may not be well-suited to becoming a retail bank, and advocating for a combination of privately issued digital currencies and a true central bank digital currency.
“The privacy of Americans has to be respected,” Toomey said. “We shouldn’t design a central bank digital dollar that allows the government to spy on Americans every transaction.”