Fed: US must play a vital role in setting CBDC standards

The Federal Reserve System (the Fed) is expanding its work on central bank digital currencies (CBDCs), with a focus on financial and geographic integration. said Lael Brainard, a member of the Fed’s Board of Governors, at the Consensus conference.

She noted that the Fed’s focus on the new instrument is being reinforced by four factors: the growing role of stablecoins, the shift to digital payments, the use of foreign CBDCs, and the risks of financial isolation.

“Given the potential of CBDC to play an important role in cross-border payments and to occupy a position as a reserve currency, the United States must participate in the development of standards,” said a Fed spokesperson.

Asked about the impact of the Chinese factor on the pace of the United States’ movement toward new digital assets, Brainard said that any development in cross-border payments could potentially have global implications.

She said that in the next quarter the Fed would launch public consultations on proposals for a possible issue of a digital dollar.

Earlier, the U.S. Treasury Secretary Janet Yellen mentioned the need to consider the possibility of developing a digital dollar.

In March 2021, the chairman of the U.S. Senate Banking Committee, Sherrod Brown, urged the Fed to explore the possibility of issuing a CBDC. In his view, the agency should take the lead in this area.

In April, Fed Chair Jerome Powell stated the possibility of issuing a national digital currency and reminded that it is more important to get it right than to race with other countries.

In the summer of 2021, the Fed will publish a discussion paper, which would complement the earlier research on the feasibility of creating a CBDC.

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