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Fed's Powell: Would pursue digital currency only with Congressional support

FILE PHOTO: Federal Reserve Chairman Jerome Powell testifies before the Senate Banking Committee hearing on "The Quarterly CARES Act Report to Congress" on Capitol Hill in Washington, U.S., December 1, 2020. Susan Walsh/Pool via REUTERS

WASHINGTON (Reuters) - The Federal Reserve would not proceed with a central bank digital currency without Congressional approval, and current research on the topic is focused on the risks and benefits not to create a prototype, Federal Reserve chair Jerome Powell said on Monday.

“We would not proceed without support from Congress,” and the passage of any needed authorizing laws, Powell said when asked at a Bank for International Settlements conference whether it would even be legal for the Fed to create a digital currency. Collaboration with the Massachusetts Institute of Technology’s Digital Currency Initiative is “focusing on the capabilities and limitations of technologies, not an attempt to create a prototype. Let’s try to build the basis and see what we learn.”

Reporting by Howard Schneider