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News

Fed Vice Chairman, Brainard tells House committee about the potential role of CBDC

May 27, 2022 - Around 2 mins mins to read
“A well-designed central bank digital currency could complement stablecoins and cash”, Brainard said in front of the House Financial Services Committee on Thursday.
Fed Vice Chairman, Brainard tells House committee about the potential role of CBDC
According to the Fed Vice Chair, a CBDC provides stability and interoperability in an increasingly complex economic system.

In Lael Brainard’s first statements following her recent swearing-in to the role of Fed Vice Chair, she told the House Financial Services Committee that the Fed is still working on the dollar digitally (CBDC) and will not act on its own without the approval of the White House and Congress.

Brainard acknowledged the position of stablecoins in the economy, saying in her written statement. She said:

“In some future circumstances, 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.”

In response to some bankers’ concerns that CBDCs would have a massive impact and potentially knock back their deposit business, Brainard said the Fed may not be using interest-bearing CBDCs.

In addition, she also mentioned that the Fed is looking at capping CBDC holdings to encourage customers to use them only in payments and not as a safe asset for people or businesses to invest their money in private.

image 343
Brainard suggested that limits on CBDC holdings could help preserve the place of credit unions in the economy and maintain the role of traditional banking

If the Fed launches a CBDC, Brainard says the asset could coexist with stablecoins and the existing US financial system. She confirmed that CBDC holding and trading will still be managed through private sector accounts, not at the Fed’s direct customer accounts.

Finally, the Fed Vice Chairman asserted that letting other Central Banks issue CBDCs, such as in Europe, could eventually weaken the US dollar as a major global currency. Based on a report from the International Monetary Fund (IMF) in March, around 100 countries are currently exploring CBDCs at various levels. Therefore, the US will fall into a state of “at-risk” if it does not act quickly.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

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Harold

CoinCu News

CBDC

Central Banks

fed

House Financial Services Committee

IMF

Lael Brainard

white house

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Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.
News

Fed Vice Chairman, Brainard tells House committee about the potential role of CBDC

“A well-designed central bank digital currency could complement stablecoins and cash”, Brainard said in front of the House Financial Services Committee on Thursday.
Fed Vice Chairman, Brainard tells House committee about the potential role of CBDC
According to the Fed Vice Chair, a CBDC provides stability and interoperability in an increasingly complex economic system.

In Lael Brainard’s first statements following her recent swearing-in to the role of Fed Vice Chair, she told the House Financial Services Committee that the Fed is still working on the dollar digitally (CBDC) and will not act on its own without the approval of the White House and Congress.

Brainard acknowledged the position of stablecoins in the economy, saying in her written statement. She said:

“In some future circumstances, 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.”

In response to some bankers’ concerns that CBDCs would have a massive impact and potentially knock back their deposit business, Brainard said the Fed may not be using interest-bearing CBDCs.

In addition, she also mentioned that the Fed is looking at capping CBDC holdings to encourage customers to use them only in payments and not as a safe asset for people or businesses to invest their money in private.

image 343
Brainard suggested that limits on CBDC holdings could help preserve the place of credit unions in the economy and maintain the role of traditional banking

If the Fed launches a CBDC, Brainard says the asset could coexist with stablecoins and the existing US financial system. She confirmed that CBDC holding and trading will still be managed through private sector accounts, not at the Fed’s direct customer accounts.

Finally, the Fed Vice Chairman asserted that letting other Central Banks issue CBDCs, such as in Europe, could eventually weaken the US dollar as a major global currency. Based on a report from the International Monetary Fund (IMF) in March, around 100 countries are currently exploring CBDCs at various levels. Therefore, the US will fall into a state of “at-risk” if it does not act quickly.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

Harold

CoinCu News

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