Fed governor Lael Brainard can’t imagine the future without a digital dollar

Highlighting a number of reasons why a digital version of the US dollar should be created, Federal Reserve Governor Lael Brainard insisted that not having one would not lead to a sustainable future. The central bank official believes that a digital dollar will have both international and domestic applications.

US Fed’s Lael Brainard can’t figure out he’s not issuing a CBDC

As other countries, notably China, move forward with their own digital currency projects, Lael Brainard, member of the Board of Governors of the US Federal Reserve, stressed the urgency of developing a digital dollar. . Speaking to the Aspen Institute’s economic strategy group on Friday, Brainard said:

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 offering, and the United States doesn’t, I can’t understand that.

“It just doesn’t look like a sustainable future for me,” added Lael Brainard, as quoted by Reuters. His statement comes as the Fed gathers public comment on the potential costs and benefits of issuing a digital currency from the US central bank (CBDC). A working document, which will also cover design aspects, is expected in early September.

Brainard went on to list various reasons why a digital dollar is needed. “One of the most compelling use cases is in the international arena, where the chains of intermediation are opaque, long and expensive,” she said. Domestically, the Fed governor drew attention to the rise of cryptocurrencies backed by fiat currency, but not by government or so-called stablecoins.

Stablecoins could proliferate and fragment the payment system, warned Lael Brainard, also noting that one or two of them could reach some level of dominance. The representative of the Federal Reserve clarified:

In a world of stablecoins, you might imagine that households and businesses, if out-of-the-money migration is really very intense, they would simply lose access to a secure government guaranteed settlement asset, which is good. sure what the currency has always provided.

Brainard is convinced that an American digital currency could help solve other important problems as well. A digital dollar could, for example, help overcome difficulties with government payments reaching people who do not have bank accounts during a crisis like the Covid-19 pandemic, she suggested. The unbanked are usually those who need these payments the most, the Fed official stressed.

Do you expect the United States to catch up with China in developing a central bank digital currency? Share your thoughts on the subject in the comments section below.

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