Powell rejects U.S. CBDC, but digital currencies like stablecoins gain momentum globally, reshaping finance - IcoHolder.

Jerome Powell, Chairman of the Federal Reserve, has firmly stated that under his leadership, there will be no U.S. Central Bank Digital Currency (CBDC). Speaking before the Senate Banking Committee on February 11, Powell emphasized that any move toward a digital dollar would require congressional approval, reaffirming his stance that no such currency is currently in development.

When pressed by Senator Bernie Moreno (R-OH), Powell responded unequivocally, stating a simple "Yes" when asked if he would block the issuance of a CBDC. His direct answer leaves little room for interpretation and makes it clear that, for now, a digital dollar will not be pursued.

However, while Powell’s words signal resistance to a state-backed digital currency, many argue that a digital dollar already exists in the form of stablecoins. These cryptocurrencies, often pegged to traditional assets like gold or fiat currencies, are being used in increasingly sophisticated ways. Some nations, such as El Salvador, have linked their stablecoins to the production of commodities, while China may tie its digital currency to rare earth minerals. These developments suggest that the push toward digital currencies may continue even without the creation of an official CBDC.

Despite Powell's public rejection of a digital dollar, there are growing concerns about the potential for CBDCs to erode financial privacy and give governments unprecedented control over personal finances. Anti-CBDC advocates in Congress, including Congressman Tom Emmer, are fighting to prevent such a move. Emmer, who introduced the Anti-Surveillance State Act, warned that a U.S. CBDC could allow the government to monitor citizens' spending habits and undermine individual freedoms. He pointed to China’s digital yuan as an example of the potential dangers of such a system, where financial overreach is a serious concern.

Globally, the trend is moving in the opposite direction. According to the Atlantic Council, 134 countries are exploring digital currencies, covering nearly the entire global economy. Out of these, 66 countries are already running advanced pilots or have fully deployed their CBDCs. China’s digital yuan continues to make strides, with new trials expanding in major cities, while Europe’s digital euro project gains momentum. Other nations like India, Brazil, and Russia are also pushing forward with their own CBDC initiatives.

Though the U.S. remains cautious, focusing instead on fostering blockchain technology without embracing a state-backed digital currency, the global shift toward CBDCs could force a reconsideration of the issue. For now, it appears that stablecoins might serve as a backdoor route for digital currencies, bypassing the reluctance of central banks like the Federal Reserve.

The future of money seems increasingly digital, with the question now being not if, but how quickly digital currencies will reshape the global financial system.