In testimony before the Senate Banking Committee on July 15, Federal Reserve chairman Jerome Powell reiterated his uncertainty as to whether the Fed would proceed with the development of a central bank digital currency or CBDC.
“I’m legitimately undecided about whether the benefits outweigh the costs of a CBDC,” said Powell.
Senator Pat Toomey (R-PN), meanwhile, seemed to support private stablecoins over a Fed-issued digital dollar. Toomey, the ranking member of the committee, asked Powell about "a change in your tone about the virtues of a central bank digital currency being issued by the Fed.”
Toomey was referring to a similar hearing before the House Financial Services Committee in which Powell noted that "one of the stronger arguments in [a CBDC's] favor" is that it would end the need for private stablecoins.
“If you have stablecoins and cryptocurrencies in use then maybe there’s no need for CBDC,” countered Toomey.
Powell, intriguingly, seemed to agree that existing stablecoins may be doing all the good that could be expected of a CBDC. Rather than the Fed issuing a digital dollar, “the more direct solution would be to appropriately regulate stablecoins,” said Powell.
The Federal Reserve under Powell has been exploring CBDCs and comparing them to existing stablecoins for quite some time, but statements regarding those explorations have been growing in frequency.
Toomey, who will not be seeking reelection in 2022, has emerged as a crypto advocate in recent months. As previously reported, his personal interest has included recently disclosed investments into Grayscale's Bitcoin and Ethereum Trusts.