- Fed Chair Jerome Powell firmly denies plans for a U.S. central bank digital currency (CBDC) during his tenure.
- Analysts warn that the Fed’s hesitation may erode dollar dominance amid rising global CBDC adoption.
- Private stablecoins and foreign digital currencies could seize 35% of the dollar’s market share.
Fed Chair Jerome Powell has canceled plans for a U.S. central bank digital currency (CBDC) under his tenure, reaffirming the Fed’s dedication to the current financial system. The statement came during his semiannual testimony on monetary policy and regulation.
“We will NEVER have a direct-to-consumer CBDC,” he replied to Sen. Bernie Moreno’s question.
Critics Slam FedNow as Global CBDCs Expand
At the same time, Powell noted that FedNow, the new instant payments system, offers a sufficient solution to upgrade all U.S. transactions. In turn, Powell’s remarks drew mixed reactions. Some market experts consider FedNow a shallow fix, likening it to a painkiller rather than heart surgery.
Meanwhile, global competitors are ramping up their CBDC projects, with China’s digital yuan gaining traction and the European Central Bank making strides with the digital euro.
The EU, in particular, is advocating for a digital euro to counter Trump’s promotion of U.S.-backed stablecoins. ECB warns stablecoins could “disintermediate banks” globally.
Related: ECB Economists Link Bitcoin’s Rise To Societal Financial Woes
Additionally, projects like mBridge—a cross-border CBDC initiative—threatens to displace the dollar in international trade. Analysts forecast that private stablecoins like USDT and USDC, along with foreign digital currencies, could capture up to 35% of the dollar’s market share.
US Leaders Rally Behind Stablecoins for Dollar Defense
Powell’s statement echoes that of US President Donald Trump, who also dismissed the idea of CBDCs under his tenure while backing stablecoins as a workable alternative. Crypto Czar David Sacks noted that stablecoins could help sustain the US dollar’s global dominance.
Related: US Crypto Czar Examines New Strategic Bitcoin Reserve ‘Potential’
This stance comforts those wary of government-run digital currencies, but others warn that Powell’s reluctance might cause the U.S. to lag in the global competition for financial innovation.
With China advancing its digital yuan and Europe promoting the digital euro, the Fed’s approach casts doubt on the dollar’s future dominance.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
