Finance

Powell squashes the possibility that the Fed will develop its own digital currency

Published

2 months ago

February 11, 2025

U.S. Federal Reserve Chair Jerome Powell testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on “The Semiannual Monetary Policy Report to the Congress,” at Capitol Hill in Washington, U.S., February 11, 2025.

Craig Hudson | Reuters

Federal Reserve Chair Jerome Powell asserted Tuesday that the central bank will not develop its own digital currency as long as he is in charge.

Ending several years of speculation whether the Fed would join some of its global counterparts, including China, in developing a formal cryptocurrency like bitcoin or its many peers, Powell said during a Senate hearing that the project would not go forward.

“Can I have your commitment that as long as you’re the chairman of the Federal Reserve system that we will never have a central bank digital currency?” Sen. Bernie Moreno, R-Ohio, asked Powell during the chair’s semiannual testimony on monetary policy and regulation.

“Yes,” Powell responded.

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

Powell’s term as Fed chief ends in May 2026.

The Fed has been examining the issue for at least four years, releasing an extensive study in 2022 that detailed the advantages and disadvantages without drawing a conclusion.

Over the years, multiple officials have raised concerns, with most saying there was no obvious need for a CBDC and citing concerns over privacy and other issues. Powell also has stressed that creating a CBDC would have required a legislative act from Congress, something less likely with a Republican majority controlling both chambers in Washington, D.C.

In the meantime, the central bank has launched its FedNow payments system that essentially addresses a number of issues that a Fed-backed cryptocurrency also would take on.

Moreno asked Powell to continue work on FedNow to make 24-hour money transfers more widely available.

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Finance

More Americans buy groceries with buy now, pay later loans

Published

4 hours ago

April 26, 2025

Business Finance News

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.