Member of the US Federal Reserve Board of Governors (FRS) Lael Brainard said that the institution has become moreloyal to the idea of issuing digital currency by the Central Bank.
As Lael Brainard stated, the Fed“conducts research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential of a government cryptocurrency.”
“Thanks to the transformation of payments, digitalizationcan provide greater efficiency and convenience at lower cost,” — Brainard said in a speech at Stanford University's Graduate School of Business in California.
The global value of the US dollar impliesthat the Fed should “remain at the forefront of research and regulatory development” regarding digital currencies, she added. But the Fed must assess whether the technology will make payments safer and reduce operating costs, and whether it carries new risks to the financial system.
US authorities must work with the private sectorto determine “whether new security measures need to be implemented, existing regulations need to be reviewed, and whether a government-owned cryptocurrency makes financial sense,” — she said.
Brainard had previously refused anyspeculation that the Fed could launch its own digital currency. In May 2018, she told attendees at a cryptocurrency conference in San Francisco that “there is no compelling or demonstrated need for a digital currency issued by the Fed.”
The Fed's softening stance towardspublic cryptocurrencies may be the answer to the problems associated with private digital currencies. In her speech this Wednesday, Brainard said the surprise announcement of the Libra stablecoin last year “has brought urgency to the debate about what form money can take, who or what can issue it, and how payments can be registered and settled.”
"Some new players are outsideregulatory mechanisms of the financial system, and their new currencies may pose problems in areas such as illicit finance, privacy, financial stability and the implementation of monetary policy,” — she said.
More and more central banks are consideringthe possibility of issuing your own cryptocurrency. This week it became known that in mid-April, the leaders of six central banks, as well as the Bank for International Settlements (BiS) will hold a meeting in Washington to discuss the possibility of creating their own digital currencies.
And although the Fed has not joined this group,In her speech, Brainard said that the bank is already “collaborating with other central banks as we improve our understanding of the digital currencies of the central bank.”
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