Key Takeaways
- Jerome Powell, the FED chair, has announced that there will never be CBDC as long as he is in charge in a Senate Meeting.
- Powell’s decision was somewhat the by-product of the legislation put forward by Trump regarding this matter on the 23rd of January 2025.
- He also cited introducing major changes to the “Basel III Endgame”.
Many Fed associates have recently discussed launching a new US dollar digital currency to enable citizens to make swift and efficient payments. If launched, the coin would have altered the power structure in the crypto market to a great extent. So, the proposal was stopped by Jerome Powell on the 11th of February when he stated that the Federal Reserve would not issue a CBDC under his rule no matter what.
In this article, we will look into this new development in the US crypto environment and what it entails. Furthermore, we will also briefly look into the “Basel III Framework” changes hinted at by Powell.
Jerome Powell Forbids Launching A CBDC Token
On the 11th of February, during a Senate Banking Committee meeting, Jerome Powell told the US lawmakers present that there will not be a Central Bank Digital Currency (CBDC) launch as long as he remains in charge, which is until 2026. This announcement has eliminated any possibility of the Fed launching a digital version of the currency anytime soon.
The statement was made in response to the questions raised by Ohio Senator, Bernie Moreno, who asked Powell whether the FED would launch their own digital currency as China and several other countries have done. Moreno’d victory in Ohop was made possible due to the funding of a crypto-backed political action committee which is one of the key things that influenced Moreno to raise this question.
Main Reason For CBDC Forbidding & Its Impact
In previous years, various Fed officials have studied the idea of launching their own digital version of the American currency, which allows people to make instant payments as long as they maintain a connection to the internet. If such a coin was approved, there was a chance that the usefulness surrounding Bitcoin (BTC) and other cryptocurrencies would be reduced.
It is for this very reason that President Donald Trump has issued an executive order 3 days into his reign prohibiting the establishment, issuance, circulation, and use of a digital dollar. And, now that Powell actively dismissed the idea, there is a high probability that the BTC and other altcoins will perform exceptionally well in the crypto market in the coming years under Trump’s rule, further solidifying his claim of introducing a crypto-friendly environment.
Powell Hints Basel Changes
At the Senate hearing, Powell also said he anticipates that the central bank will consider adding many changes to the “Basel III Endgame”. It refers to the final set of regulatory changes under the Basel III framework, aiming to overhaul how banks calculate and manage their capital requirements. Per his comments, the proposal, which was put forward in July 2024 will likely undergo broad and material changes.
If this comes into session, it will remake how roughly a dozen of the largest banks in the nation will calculate their risks and how much capital they have to hold to mitigate the losses. Even though this has resulted in various senate members raising their concerts, Powell countered them by vaguely specifying that he is well aware of all these and that the changes will also be accounted for these issues.
For further updates surrounding the matter and other regulatory news, stay tuned.
