Closer to home, Brainard believes that the growth of stablecoins might split the payment system if there is no digital currency.
According to Federal Reserve Governor Lael Brainard, other nations are rushing to create their own central bank digital currency (CBDC), who spoke to Reuters on Friday.
According to a Reuters report, Brainard said at the Aspen Institute Economic Strategy Group, “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 offering, and the U.S. doesn’t have one, I just, I can’t wrap my head around that.”
Fed Chair Jerome Powell told a House committee earlier this month that a report on CBDC will be released in early September, as the central bank weighs the pros and cons of launching a digital currency. Meanwhile, China is putting its own CBDC to the test.
According to the paper, Brainard believes that the development of stablecoins might split the payment system in the absence of a digital currency.
Reuters cited the Fed governor as stating that a digital currency might enable individuals without bank accounts to obtain government aid such as pandemic relief payments.
In a separate statement, Brainard stated that she sees no evidence that current high inflation readings are driving longer-term inflation expectations over the central bank’s 2% objective.