Federal Reserve Governor Lael Brainard on Friday outlined a number of compelling reasons for taking urgent action to introduce a U.S. central bank digital currency, including the fact that other nations, like China, have already adopted their own.<\/p>\n\n\n\n
“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 (central bank digital currency)offering, and the U.S. doesn’t have one, I just, I can’t wrap my head around that,” Brainard told the Aspen Institute Economic Strategy Group. “That just doesn’t sound like a sustainable future to me.”<\/p>\n\n\n\n
Fed officials are scrutinizing the digital payments universe, seeking public feedback on its potential costs and benefits, and design considerations with a view to publishing a discussion paper in early September.<\/p>\n\n\n\n
There are also domestic reasons for a U.S.-backed digital currency, Brainard adds the dramatic rise of stablecoins, a type of cryptocurrency that is pegged to a conventional currency like the U.S. dollar but is not supported by any government.<\/p>\n\n\n\n
A CBDC could also solve other problems, she suggested, including the difficulty during the pandemic of getting government payments to people who do not have a bank account, who also tend to be the very people who urgently need them.<\/p>\n\n\n