News

View the latest business news about the world's top companies

 
Please enter a US-company name/ticker as the country selected is US
Please enter a valid form type for the selected country US
No data to display.

Fed Governor Lael Brainard discusses CBDC policy considerations

PUBLISHED ON 2021-05-25 01:02:00 EST Yashasvini

laelbrainard.jpg


Fed Governor Lael Brainard said that the growth of digital private money, digital payments, and probable use of foreign central bank digital currencies (CBDCs) in cross-border payments are the reasons behind the Fed’s piqued interest in CBDCs.

At the Consensus by CoinDesk 2021 Conference, Brainard explained the various CBDC policy considerations that needed to be examined before issuing a digital dollar. She acknowledged that CBDC may have the ability to lower transaction costs and increase access to digital payments. Despite stating these benefits, she stated concerns regarding financial exclusion, underlining the core goal of the Fed to “provide ubiquitous access to an instant payments system via depository institutions.”

Brainard stressed the evolution of any regulatory framework. It must be shared across the different agencies with jurisdiction over the digital asset sector. Further, she said the U.S. should help develop the standards around cross-border payment systems, which CBDCs could provide.

Brainard cautioned against the growth of private money, stating that it would, in turn, raise costs for businesses or households, and equaled it to the time when private entities issued their own paper money in the nineteenth century. “It is not obvious that new forms of private money that reference fiat currency, like stablecoins, can carry the same level of protection as bank deposits or fiat currency,” she added.

Brainard said she is paying attention to how other countries like China are developing their own CBDCs. “The issuance of a CBDC in one jurisdiction … does potentially have significant effects across the globe,” she said. “And so it’s very important for us to follow many central banks’ progress on CBDCs.”

Brainard has served in the U.S. Treasury Department before her role at the central bank. In 2020, she revealed that the Boston branch of the Fed was researching CBDCs with the MIT Digital Currency Initiative. The first report on this research will be published later this summer.

Picture Credits: AP

0
Stock View