During the Senate Banking Committee nomination hearing for the next Federal Reserve Chair, Kevin Warsh said no to a central bank digital currency (CBDC). His response does not appear to rule out the potential for wholesale tokenized central bank money, which he has previously proposed.
Here’s the exchange between Warsh and Senator Bernie Moreno yesterday.
Moreno: Do you agree that the Federal Reserve has no legal right to issue a central bank digital currency?
Warsh: Senator, I agree that they don’t have the right and I think it would be a bad policy choice.
Moreno: So, let me just put an exclamation mark on that. Under your chairmanship of the Federal Reserve, you will not have the Federal Reserve explore in any way a move towards a central bank digital currency.
Warsh: If it’s within the power of the chairman of the Federal Reserve, I agree with that statement.
While some have claimed Warsh previously supported a CBDC, he did not endorse a retail CBDC. In 2022 Warsh penned an opinion piece in the Wall Street Journal (unlocked article) that was largely motivated by the digital yuan. He argued that China’s e-CNY threatened dollar dominance and warned that a new bipolar currency system could emerge. He noted that retail CBDC “is at odds with the American ethos of privacy from government intrusion” and that the “interface with citizens should rest with the private sector.” His proposed response was a wholesale digital dollar for transactions among the government, financial firms and foreign central banks.
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