Fed Rejects CBDC After Trump Ban, as Global Digital Currency Plans Stall

Federal Reserve Chair Jerome Powell has vowed that the U.S. central bank will never adopt a central bank digital currency after Trump’s order.

Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee on Capitol Hill, in Washington, on Feb. 11, 2025. Chip Somodevilla/Getty Images

The Federal Reserve will never adopt a central bank digital currency (CBDC), the U.S. central bank’s chairman, Jerome Powell, confirmed on Tuesday to lawmakers on Capitol Hill. Powell’s pledge follows President Donald Trump’s recent executive order barring federal agencies from developing a digital dollar and comes amid a broader slowdown in CBDC adoption by central banks worldwide.

Testifying before the Senate Banking Committee on Feb. 11, Powell faced pointed questions from Sen. Bernie Moreno (R-Ohio), who raised concerns about a potential CBDC in the United States that mirrors China’s financial surveillance practices. China’s digital yuan—the largest CBDC project in the world—allows authorities to see people’s financial transactions, empowering the regime to use the financial system as a tool for surveillance and targeting of dissidents.

“Something that concerns me a lot is the idea that we would even look like China in any way,” Moreno said. “So can I have your commitment, so long as you’re the chairman of the Federal Reserve system, that we will never have a central bank digital currency?”

“Yes,” Powell replied, nodding in affirmation.

“Thank you for that,” Moreno said. “I think that’s extremely important and makes me very happy to hear you say that.”

The exchange underscores widespread opposition to the potential adoption of a CBDC among congressional Republicans, who argue that it could enable government overreach and financial surveillance of Americans. A bill introduced in 2023 to ban a digital dollar without explicit congressional authorization passed the House in May 2024 but has stalled in the Senate.

Trump Bans Federal CBDC Development

Powell’s pledge aligns with Trump’s Jan. 23 executive order that prohibits any federal agency from developing, issuing, or promoting a CBDC, based on the premise that CBDCs “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States.” The Federal Reserve is technically not a federal agency and is independent of the executive branch, so Powell’s commitment not to adopt a CBDC is significant as it signals alignment with the administration’s stance.

Before Trump’s order, the United States was among more than 130 countries exploring CBDCs, collectively representing 98 percent of the global economy, according to the Atlantic Council’s CBDC tracker. The move marks a significant shift in policy and sets the United States apart from other major economies considering digital currencies.

The U.S. shift comes at a time when central banks worldwide are delaying CBDC adoption. A recent survey by the Official Monetary and Financial Institutions Forum and Giesecke+Devrient Currency Technology found that 31 percent of central banks have postponed their CBDC timelines, citing economic challenges and shifting political priorities.

Despite years of technical exploration of CBDCs, hesitancy remains. The report notes that while technical challenges have largely been overcome, new obstacles—such as political resistance and privacy concerns—are emerging as the primary roadblocks.

“Privacy is becoming an increasingly contentious issue due to the vast amounts of personal data being collected, stored and analysed,” the report states.

The survey also revealed a decline in central bank enthusiasm for CBDCs. The proportion of central banks more inclined to issue a CBDC fell to 18 percent in 2024, down from 38 percent in 2022. Meanwhile, those less inclined to pursue one rose to 15 percent, up from 0 percent in 2022.

Still, 67 percent of central banks have maintained their stance on CBDC issuance, with the report highlighting “preserving central bank monetary sovereignty” as a key motivation for digital currency development, especially in major economies such as the eurozone.

CBDC Debate

Advocates of CBDCs argue that digital currencies could revolutionize finance by enabling 24/7, real-time, cross-border payments and offering a government-backed alternative as cash usage declines. However, critics contend that many of these benefits can be achieved through existing payment systems without the risks of state-controlled digital money.

Public opposition has centered on privacy fears—one of Trump’s main criticisms of CBDCs. While central bankers deny that digital currencies would be used for surveillance, there is widespread skepticism, especially in light of China’s use of the digital yuan as part of its social credit system for social control.

Josh Lipsky, director of the Atlantic Council’s CBDC tracker, believes Trump’s executive order will have limited domestic impact, as the Fed has never seriously pursued a retail CBDC. However, he argues the global signal is more significant.

“It tells Europe that they have the playing field to themselves to set privacy and cybersecurity standards through the digital euro,” Lipsky told Reuters in a recent interview. Meanwhile, he said, China can approach other countries and say that “the U.S. is not involved in this technology you’re interested in, but we are and we are leading.”

While the United States distances itself from CBDCs, digital currency initiatives continue elsewhere. As of September 2024, all G20 nations—including the United States—were exploring CBDCs, with 19 in advanced stages and 13 running pilot programs, including Brazil, Japan, India, Australia, Russia, and Turkey, according to the Atlantic Council tracker.

Among BRICS nations—Brazil, Russia, India, China, and South Africa—CBDC pilot projects are underway. The bloc has actively promoted alternative payment systems to reduce reliance on the U.S. dollar.

So far, three countries—the Bahamas, Jamaica, and Nigeria—have fully launched CBDCs.

Trump’s CBDC ban delivers on a promise he made repeatedly during his campaign.

“As your president, I will never allow the creation of a central bank digital currency. Such a currency would give the federal government absolute control of your money,” Trump said at a Jan. 17, 2024, rally in New Hampshire. “This would be a dangerous threat to freedom—and I will stop it from coming to America.”

In contrast, the Biden administration had favored exploring a digital dollar, maintaining that it could offer multiple benefits, including efficient, low-cost transactions, greater financial inclusion, economic growth, and reinforcing the U.S. dollar’s global financial dominance.