Federal Reserve Board Governor Lael Brainard on Friday laid out a case for the role a US central bank digital currency could play in bolstering financial stability as the use of stablecoins and cryptocurrency grows and other countries issue their own CBDCs.
“It is essential that policymakers, including the Federal Reserve, plan for the future of the payment system and consider the full range of possible options to bring forward the potential benefits of new technologies, while safeguarding stability,” Brainard said in remarks prepared for delivery to the US Monetary Policy Forum in New York. “A US CBDC may be one potential way to ensure that people around the world who use the dollar can continue to rely on the strength and safety of US currency to transact and conduct business in the digital financial system.”
Fed policymakers are divided on the need for a central bank digital currency, even as many other central banks globally are pressing ahead on such plans.
Brainard has emerged as a supporter of the idea, though in her remarks she emphasized the importance of considering the potential impact of a US CBDC rather than making any outright claims for the need to adopt it.
“It is important to consider how new forms of crypto-assets and digital money may affect the Federal Reserve’s responsibilities to maintain financial stability, a safe and efficient payment system, household and business access to safe central bank money, and maximum employment and price stability,” she said Friday.
Proponents of a CBDC say it could streamline payment systems, improve financial inclusion and even bolster financial stability, while others worry about the costs, including privacy concerns.
On one point Fed policymakers do appear to be in agreement: the Fed will not launch one without clear support from the White House and Congress, policymakers have indicated.
The team at Platform Executive hope you have enjoyed the ‘Fed’s Brainard sees case for US central bank digital currency‘ article. Automatic translation from English to a growing list of languages via Google AI Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Ann Saphir. Editing by Andrea Ricci.
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