July 30 (Reuters) – Federal Reserve Governor Lyle Brainard on Friday laid out a set of reasons for “urgency” on the issue of developing a US central bank digital currency, including the fact that other countries such as China are pressing ahead with their own currencies. .
“The dollar is very dominant in international payments, and if you have the other major jurisdictions in the world with a digital currency, the CBDC (central bank digital currency) offer, and the US doesn’t have one, I can just don’t understand,” Brainard said. That.” “That doesn’t sound like a sustainable coming to me.”
Federal Reserve officials delve into the world of digital payments, gathering public comment on potential costs and benefits as well as design considerations with the goal of publishing a discussion paper in beforetime September.
Fed Chairman Jerome Powell in his comments earlier this month described the analysis as a major step in accelerating the Fed’s efforts to determine whether it should issue its own CDBC.
“One of the most compelling use cases is in the international arena, where the chains of mediation are obscure, lengthy and expensive,” Brainard said on Friday.
But there are also domestic reasons for a US-backed digital currency, she said: the massive rise in stablecoins, a form of cryptocurrency that is tied to a traditional currency like the US dollar but not backed by any government.
She said stablecoins could proliferate and disintegrate the payment system, or one or two could emerge as dominant. Either way, “in a world of stablecoins, you can imagine that households and businesses, if migration away from currency is really so intense, they will simply lose access to a safe, government-backed settlement asset, which of course is what currency has forever provided.”
She suggested that central bank digital currency could also aid solve other problems, including the difficulty during the pandemic of getting government payments to people without bank accounts, who also tend to be the people most in need of payments.
(Reporting by Ann Sapphire.) Editing by Sandra Mahler
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