Source: Coindesk.com
A well-designed central bank digital currency could complement stablecoins and cash, Brainard will say in front of the House Committee of Financial Services on Thursday.
Federal Reserve Vice Chair Lael Brainard said that a central bank digital currency (CBDC) could exist alongside stablecoins and provide a measure of safety. Brainard’s comments were part of testimony released in advance of her appearance in front of the Financial Services Committee on Thursday.
“CBDC could coexist with and be complementary to stablecoins and commercial bank money by providing a safe central bank liability in the digital financial ecosystem, much like cash currently coexists with commercial bank money,” Brainard wrote.
She also wrote that thoughtful regulation is necessary given the recent collapse of TerraUSD (UST) and Tether. “The rapid ongoing evolution of the digital financial system at the national and international levels should lead us to frame the question not as whether there is a need for a central-bank-issued digital dollar today, but rather whether there may be conditions in the future that may give rise to such a need,” Brainard said. “We recognize there are risks of not acting, just as there are risks of acting.
Brainard also addressed the capabilities of a CBDC to facilitate global payments, and how the U.S. can serve as an example in digital finance with “privacy, accessibility, interoperability, and security.”
For its part, the Federal Reserve has been soliciting comments recently on the advisability of setting up a CBDC. Wall Street bankers have expressed concerns that a U.S. CDBC could disrupt the banking system while Circle, the issuer of stablecoin USDC, said a federal stablecoin might squash private-sector tokens.
Fed officials have routinely said the U.S. central bank doesn’t intend to move forward on a CBDC without backing from the president and the Congress.
