Federal Reserve Governor: Can't Understand Why There Isn't a Central Bank Digital Dollar, Stablecoins Will Fragment Payment Systems

Federal Reserve Governor Lael Brainard stated that as central bank digital currencies (CBDCs) are being developed worldwide, the United States cannot afford to not have a CBDC. Without a digital dollar issued by the central bank, stablecoins could potentially disrupt the payment system and impact the dominance of the US dollar.

Federal Reserve Governor Lael Brainard stated that as central bank digital currencies (CBDCs) are being developed worldwide, the United States cannot afford to not have a CBDC. Without a digital US dollar, stablecoins could disrupt the payment system and potentially threaten the dominance of the US dollar.

According to a report by Reuters, Brainard emphasized that one of the main reasons the US needs a digital dollar is the competitive issuance of CBDCs by other countries, particularly China.

"The dollar is very dominant in international payments, and if you have the other major jurisdictions in the world with a digital currency, a CBDC, and I don’t have one, that doesn’t make sense."

Brainard highlighted that without a digital dollar, the proliferation of stablecoins could fragment the payment system, potentially leading to a scenario where one or two stablecoins could achieve a significant level of dominance, jeopardizing the ability for businesses and households to access a reliable government-backed settlement currency.

On the other hand, a digital dollar could help individuals without bank accounts access government assistance, such as relief funds during crises like the pandemic.

In July, Federal Reserve Chairman Jerome Powell informed the House of Representatives that the Fed would release a report on CBDCs in early September, including a cost-benefit analysis.

This article is authorized and republished from Horizon News Network.