Jerome Powell says Fed is doing lots of work on a digital dollar as policymakers warily eye China's digital yuan

• Fed Chair Jerome Powell said the bank is looking extensively into how a digital dollar might work.
• The Biden administration is increasing its scrutiny of China's digital yuan, Bloomberg reported.
• Powell said the public and Congress must be closely involved in plans for a digital dollar.

Federal Reserve Chairman Jerome Powell has said the US central bank is working hard on researching a potential digital dollar, as nervousness grows in some quarters about China's rapid development of its own digital currency.

Powell told CBS's "60 minutes" in an interview aired Sunday the Fed is running a number of technological experiments looking at how exactly a digital dollar might work.

"There are many subtle and difficult policy choices and design choices that you have to make. We're doing all that work."

But Powell said no final decision has been made, adding that it would be an important step that required the involvement of the public and Congress.

US officials are increasing their scrutiny of China's development of a digital yuan, Bloomberg reported Sunday, with some concerned it could be a long-term attempt to dislodge the dollar from its dominant place in the global economy.

Powell told CBS the Fed is evaluating China's digital currency plans, which have been in the pipeline for years and are now picking up pace. Yet he did not say he was concerned about them.

People familiar with the matter told Bloomberg officials at the Treasury, State Department, Pentagon and National Security Council are increasing their efforts to understand what China's intentions are with its digital currency.

A central bank digital currency, known as a CBDC, would let people access central bank money digitally to hold and make payments.

The public can currently only hold central-bank issued money in the form of physical coins and notes, and largely uses electronic representations of cash held at banks or on prepaid cards to make payments digitally or online.

Many central banks think CBDCs could make payment systems considerably more efficient, and see them as a necessary step as the use of clash plummets.

China hopes to be the first major economy to launch a CBDC. It has already begun extensively trialling the digital yuan and the country's central bank is also looking into using the digital yuan in cross-border payments.

Powell said the US currently has lots of different CBDC projects running. "We have a group of people who are doing different software development and that kind of thing. It's a very, very large, complex project."

But he said: "Really, the question is would adding a digital dollar, would it benefit our citizens and the people that we serve? And we don't have an answer to that question yet."

Although China's plans are causing concerns in some quarters, Powell did not sound overly worried.

"We're in a great place with our currency," he told CBS. "We are the world's reserve currency. Meaning that people use dollars even if they have no connection to the United States. They use dollars to pay for things all over the world."