Federal Reserve Governor Lael Brainard on Friday outlined a number of compelling reasons for taking urgent action to introduce a U.S. central bank digital currency, including the fact that other nations, like China, have already adopted their own.
“The dollar is very dominant in international payments, and if you have the other major jurisdictions in the world with a digital currency, a CBDC (central bank digital currency)offering, and the U.S. doesn’t have one, I just, I can’t wrap my head around that,” Brainard told the Aspen Institute Economic Strategy Group. “That just doesn’t sound like a sustainable future to me.”
Fed officials are scrutinizing the digital payments universe, seeking public feedback on its potential costs and benefits, and design considerations with a view to publishing a discussion paper in early September.
There are also domestic reasons for a U.S.-backed digital currency, Brainard adds the dramatic rise of stablecoins, a type of cryptocurrency that is pegged to a conventional currency like the U.S. dollar but is not supported by any government.
A CBDC could also solve other problems, she suggested, including the difficulty during the pandemic of getting government payments to people who do not have a bank account, who also tend to be the very people who urgently need them.
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