Federal Reserve chairman Jerome Powell said Tuesday that he believes the U.S. central bank should work with Congress to create a digital dollar.
Speaking before the Senate Banking Committee, Powell said that while existing laws governing the Fed's activities could serve as a basis for issuing a digitized version of the U.S. dollar, he expressed a preference for working on a legislation-backed push instead. The subject of a central bank digital currency was raised during questioning from Senator Pat Toomey of Pennsylvania.
“I think this is such a fundamental issue, it would be ‘ideal’ if this were to be a product of broad consultation and ultimately authorizing legislation from Congress," Powell remarked.
Powell said earlier this year that he believed Congressional authorization could be required, but Tuesday's remarks indicate that Powell would invite such involvement. In May, Vice Chairman for Supervision Randal Quarles told the same committee that he believed and future Fed work on a digital dollar would require a nod from Congress.
What forms a Fed-led digital dollar, if it did come to fruition, could take remains to be seen, though the Boston Fed branch is currently working with the Massachusetts Institute of Technology on prototype digital dollar applications. Some of the results of that process are expected to be made public sometime before the end of the year.