Fed nominee looks to Congress for guidance on US digital dollar

The U.S. Federal Reserve is deferring to Congress to decide whether to introduce a central bank digital currency (CBDC), Lael Brainard told the Senate banking committee Thursday at her Fed vice chair nomination hearing.

Fast facts

• Republican Senator Cynthia Lummis asked whether the vice chair nominee believed that the digital dollar should be available to retail customers, as China’s upcoming digital yuan.

• “We really are looking to Congress in the first instance, and the Administration to give us guidance in this area,” Brainard responded. “We want to make sure that we do the requisite research on policy and technology so we’re in a position to move forward if Congress decides it’s important to be able to compete with China in this regard.” 

• Various industry watchers expect China’s upcoming digital yuan launch to challenge the U.S. dollar’s position as the global hegemonic currency. 

• On Wednesday, Republican Congressman Tom Emmer introduced a bill that would prohibit the Fed from issuing a CBDC directly to Americans, citing “China’s digital authoritarianism” and privacy concerns.

• At his own nomination hearing Tuesday, Jerome Powell said the Fed’s highly anticipated research report on cryptocurrencies and CBDCs, originally due in September, would be released “within weeks.”