On February 6th, Fed director Lael Brainard said that the Fed was exploring the potential application of the central bank's digital currency (CBDC), and she also warned about the risks of stablecoins.
It is reported that Brainerd delivered an important speech at a future payment theme seminar held at Stanford Business School on Wednesday.
Brainard mentioned in his speech that the Fed is conducting research and experiments related to distributed ledger technology and potential use cases for digital currencies, including exploring the potential of the central bank's digital currency (CBDC).
(Photo: Fed Governor Lael Brainard)
Brainerd cited a recent BIS survey that showed that as of January 2020, about 80% of central banks around the world were engaged in some form of central bank digital currency (CBDC) research and development. This figure It is 10% higher than last year.
Given the important role of the US dollar in global markets, Brainard believes that the Federal Reserve must be at the forefront of central bank digital currency (CBDC) research and policy development.
Calls Facebook Libra and Chinese central bank digital currencies key developments
Brainerd said new digital payment, currency and settlement tools are proliferating, specifically mentioning Facebook ’s Libra project and China ’s upcoming digital renminbi, and listing them as key developments in the global private and public sectors.
Brainerd twice described the potential role of the central bank's digital currency (CBDC) as "maintaining a sovereign currency as the basis for a particular country's payment system."
Speaking of the possibility of launching a central bank digital currency, Brainerd said that this needed to determine if it could provide important benefits, she cited:
"Specific considerations to consider include considering the innovation provided by the private sector, whether a new form of digital central bank debt could improve the payment system, and the addition of a new form of central bank from a security and resilience perspective Will debt reduce operational loopholes? "
She also said that another issue that needs to be addressed is whether the Fed's central bank digital currency will reduce the complexity of payments, improve end-to-end processing, or simplify record keeping.
Warning stablecoins may pose a threat to financial stability
It is reported that in addition to talking about the central bank's digital currency at the seminar, Brainard also issued a warning on stablecoins:
"Any stablecoin project of global scale faces a series of core legal and regulatory challenges."
It mentioned that the fraudulent activities of existing cryptocurrencies, consumer losses and risks of illegal activities may be amplified by widely accepted universal stablecoins.
In delving into the risks consumers will face, the Fed director pointed out that it is unclear what protection or recourse consumers will have in global stablecoin transactions and balances, and she added that if liquidity, credit The market or operational risk alone or combined cannot be effectively managed. The stablecoin may cause loss of confidence and behavior similar to running away, posing a threat to financial stability.
Brainard mentioned that the public sector is actively engaging with the private sector and the research community to consider whether new barriers need to be established for the digitization of currency and payments.