Jerome Powell: Digital dollar cannot be issued without regulatory approval

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The US Federal Reserve Chairman said Congress should seek guidance from the Fed before implementing a central bank digital currency.

Jerome Powellspoke before the Financial Services Committee of the US House of Representatives. Before launching a digital dollar, the Fed needs to study everything carefully, since it will significantly affect the financial system:

“This is potentially a very important financialan innovation that will impact all Americans. Our plan is to work on both the political and technological sides of the issue in the coming years. And then present your recommendations to Congress."

According to the official, the introduction of digitaldollar will provide citizens of the country with experience in conducting financial transactions using digital currencies. The Fed has a lot of work to do, Powell warned.

One of the key difficulties is thatto understand whether a central bank digital currency would improve the secure and efficient domestic payment system already in place, Powell says. Potentially, the digital dollar could maintain the international dominance of the dollar, but Fed analysts cannot yet give an accurate forecast.

Let us remind you that the Fed is considering the prospectsimplementation of a sovereign digital currency since 2017 and, according to Congressman Jim Himes, the longer the US government waits before making a decision, the further the United States lags behind other countries. The congressman called for the legislation to be passed as soon as possible.

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Earlier, Deutsche Bank chief economist Matt Luzzetti said that the Fed's aggressive actions would accelerate the economic recession in the United States.