Is the United States ready for a digital dollar? Not just yet, Federal Reserve Governor Lael Brainard said in a speech to CoinDesk’s Consensus 2021 Monday (May 24).
There are a few policy considerations to take into account first, Brainard said, such as maintaining access to payment in âsafe central bank moneyâ and the efficiency of clearing, complementing bank deposits, l ‘increased financial inclusion and protection of privacy and financial stability. The rise of digital currency and private money is helping fuel increased interest in a central bank digital currency (CDBC), she said.
âI believe in the context where we maintain the role of safe central bank money as the foundation of the payments system, there is a lot of room for competition and innovation to flourish,â Brainard said. .
She welcomed innovations in the field, but added that the regulatory framework must evolve with the currency and must be shared between agencies. She went on to say that the United States needs to create standards for cross-border payment systems. âI think some cryptocurrencies are very different, in some cases more traditional financial assets,â she said.
Brainard also warned that the increase in private money could ultimately hurt the U.S. payments system, leading to higher costs for businesses and consumers. She compared it to the unregulated banking days of the 1800s, when private companies issued their own currency. âIt is not clear that new forms of private money that refer to fiat money, like stablecoins, can enjoy the same level of protection as bank deposits or fiat money,â she said.
Brainard’s comments came just days after Fed Chairman Jerome Powell called for a greater contribution to the digital currency. “As the central bank of the United States, the Federal Reserve is responsible for promoting monetary and financial stability as well as the safety and efficiency of the payments system,” he said in a video released last week. . “In pursuit of these essential functions, we are closely monitoring and adapting to technological innovations that are now transforming the world of payments, finance and banking.”