Member of the Board of Governors of the US Federal Reserve (FRS) Lael Brainard said the institution has become more loyal to the idea of issuing digital currency by the Central Bank.
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As Lael Brainard stated, the Fed"Conducts research and experiments related to distributed registry technologies and their potential use case for digital currencies, including the potential of the state cryptocurrency."
“Thanks to the transformation of payments, digitalizationcan provide greater efficiency and convenience at a lower cost, ”said Brainard in her speech at Stanford 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 sector,to determine “whether it is necessary to introduce new security measures, review existing regulatory rules, and whether the state cryptocurrency will have financial sense,” she said.
Brainard previously refused anyassumptions that the Fed may launch its own digital currency. In May 2018, she told participants at a cryptocurrency conference in San Francisco that “there is no convincing and proven need for a digital currency issued by the Fed.”
Softening the position of the Fed in relation togovernment cryptocurrencies may be the answer to the problems associated with private digital currencies. In her speech on Wednesday, Brainard said that the unexpected announcement of Libra stablecoin last year “brought about the relevance of the discussion about what form money can take, who or what can issue it, and how payments can be recorded and settled.”
"Some new players are outsidethe regulatory mechanisms of the financial system, and their new currencies can cause problems in areas such as illegal financing, confidentiality, 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.”