Fed’s Brainard sees case for central bank digital currency

Fed’s Brainard sees case for central bank digital currency

Creating an official digital version of the U.S. dollar could help ensure financial system stability as crypo-assets and digital currencies developed by other countries become increasingly popular, Federal Reserve Vice Chair Lael Brainard said on Wednesday.

"As we assess the future digital financial system, it is prudent to consider how to preserve ready public access to safe central bank money, perhaps through the digital analogue of the Federal Reserve's issuance of physical currency," Brainard said in testimony released in advance of her appearance on the issue before the U.S. House of Representatives Financial Services Committee on Thursday.

"We recognize there are risks of not acting, just as there are risks of acting," she said.

Fed policymakers remain divided on the need for a central bank digital currency (CBDC) and have just finished a three-month public consultation period soliciting feedback on the idea. The Fed has also indicated it would not launch one without clear support from the White House and lawmakers.

That puts it behind its other major global central bank peers, including the ECB, Bank of Japan and Bank of England, on the process of possible adoption. China is currently piloting its own CBDC and in total nine countries have launched one and