Federal Reserve Board Governor highlights the importance for a US CBDC.
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The U.S. Federal Reserve doesn’t know whether it will issue its own central bank digital currency (CBDC) or not, Lael Brainard, Federal Reserve Board Governor, on Friday highlighted several reasons to start developing such a digital currency. Brainard made these comments when delivering a speech at the U.S. Monetary Policy Forum in New York. The executive mentioned that a US CBDC could boost financial stability.
Dollar is very dominant in international payments.
Brainard also noted that the U.S. dollar is very dominant in international payments. She highlighted that the U.S. has to launch a CBDC. However, she warned that if they don’t, they will lose access to a safe government-backed settlement asset, which is what the currency has always provided. In other words, Brainard admitted that U.S. CBDC could play an important role in ensuring that the U.S. dollar maintains its prominence around international markets.
“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. A U.S. 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 U.S. currency to transact and conduct business in the digital financial system,” Brainard said.
Federal Reserve policymakers are still divided on the need for a CBDC.
Fed policymakers are still divided on the need for a national digital currency despite several other central banks across the world continuing with plans to launch their national digital currencies. Brainard has emerged as a supporter of the CBDC launch. She emphasized the need to consider the potential impact of a U.S. CBDC instead of mere claims to adopt it.
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