During Federal Reserve Chairman Jerome Powell’s July 2021 congressional testimony, several elected members encouraged Powell to fast-track the issuance of a Federal Reserve digital currency. Chairman Powell indicated he is not convinced there is a need for a Fed digital currency. But he also indicated that Fed staff are actively studying the issue and that his opinion could change based on their findings and recommendations. In this report, I explain how a new Federal Reserve digital currency would interface with the existing payment system and review the policy issues associated with introducing a Fed digital currency. …
