Federal Reserve looks into CBDC potential
06 Feb 2020
A member of the board of governors of the U.S. Federal Reserve has indicated the Fed is more open to the idea of a central bank digital currency than before.
The statements were made by Lael Brainard during a speech at the Stanford Graduate School of Business this week, Coin Telegraph reports.
During the speech Brainard announced the Federal Reserve was “conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC (central bank digital currency).”
Brainard talked about a recent poll carried out by the Bank for International Settlements which said that from January this year, 80% of central banks around the world are now involved in some form of CBDC work. This is a 10% increase over the last year.
Taking into account the dollar’s role in global markets, Brainard added it’s crucial for the Fed to stay “on the frontier of research and policy development regarding CBDC.”
The member of the board of governors went on to say that new digital payments, currency and settlement instruments are flourishing, with Facebook’s Libra and China’s upcoming digital yuan momentous developments around the world.
As part of her speech, Brainard referred to the role of CBDCs in maintaining a sovereign currency as the anchor of a country’s payment system.
She also mentioned the possible effect of new private and public projects: “For smaller economies, there may be material effects on monetary policy from private-sector digital currencies as well as foreign central bank digital currencies. In many respects, these effects may be the digital version of ‘dollarization,’ with the potential for a faster pace and wider scope of adoption.”