Lael Brainard, a member of the United States Federal Reserve’s Board of Governors has confirmed that the central bank will wait on the result of ongoing experiments by other jurisdictions to decide whether or not to issue a digital currency.
Brainard made that assertion as part of her speech at “The Future of Money in the Digital Age” conference held on Wednesday at the Peterson Institute for International Economics (PIIE), where she fielded questions regarding the evolution of money and digital currencies.
Regarding how close the U.S Federal Reserve is to issuing a presentable digital currency (with similar efforts reported in Sweden and China), Brainard noted that there is a stark contrast in the payment landscape of both jurisdictions when compared to the United States.
According to her “there has been a very rapid migration away from cash to digital payments” in these jurisdictions “while the reverse has been true in the U.S.”
“We have a lot of movements in the digital payments, but we also have a lot of growth in the demand for cash.” the Fed Governor explained.
She also suggested that the U.S is in a somewhat different position because of the nature of its sovereign currency and the role it plays more broadly and would rather learn from their counterparts.
“We will watch all those developments very closely and look forward to learning from them,” Brainard added.
Meanwhile, in what was perhaps a reference to the Fed’s recently announced payment system, FedNow, Brainard affirmed that they “will make important investments in future technology, to give the consumers the benefits of real-time digital payments.”
“We are also going to be exceptionally cautious and mindful of the profound differences a central bank-backed digital currency would imply along the lines of [….] consumers having accounts account directly with the central bank, monetary policy transmission and financial stability,” the Fed Governor concluded.
The Race for CBDCs
While the question answered by Fed Governor, Brainard focused on efforts by central banking authorities in China and Sweden to launch a digital currency, Coinfomania reported earlier today the Canadian Central Bank is also considering the issuance of a digital currency that would replace fiat.
Lael Brainard Image via Peterson Institute for International Economics (PIIE)
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