US must win CBDC race to maintain dollar’s global reserve currency status: Federal Reserve Governor

US must win CBDC race to maintain dollar’s global reserve currency status: Federal Reserve Governor

The Fed governor has argued that the United States should be at the forefront of developing a central bank-issued digital currency, or CBDC, to strengthen the role of the US dollar as a global reserve currency.

In a May 24 announcement, Federal Reserve Governor Lyall Brainard stressed that CBDC’s major projects could have a “significant impact” on the global financial system, urging the US to ensure that it took a leading role in the CBDC ecosystem Play:

“Given the prominence of CBDC in cross-border payments and the reserve currency role of the dollar, it is important for the United States to be on the table in developing cross-border standards.”

The announcement states that the Fed is “focusing its attention” on four key areas of CBDC’s growth – the “growing role of digital private funds, migration to digital payments, plans to use foreign CBDCs in cross-border payments,” And concerns about financial boycott ”. . ”

The governor offered some potential benefits to launch the CBDC, stating that the Kovid-19 epidemic had caused “rapid migration to digital payments” to American homes, and noted that prepaid debit cards were a relief. It took “weeks” to deliver. Households that do not have up-to-date bank information with the Internal Revenue Service.

“We should try to figure out and anticipate that over time the needs and priorities of homes and businesses can move towards digital payments,” he said.

Brenard also emphasized the potential risks associated with widespread adoption of private fixed stocks, suggesting that the CBDC could provide utilities and benefits associated with existing USD stable tokens without undermining the government’s control over monetary policy.

“Unlike the fiat currencies of the central bank, fixed currency does not have the status of a legal tender [,] there is a risk that the widespread use of private funds for consumer payments may push parts of the American payment system in a way that increases Is a burden and cost for homes and businesses.

“In any assessment of CBDC, it is important to be clear about what benefits CBDC will provide in addition to current and emerging payment options, what costs and risks CBDC may have, and how this may affect broader policy objectives.”

On May 20, Federal Reserve President Jerome Powell announced that the Fed would compile a paper discussing the benefits and risks of the CBDC, stating: “As fixed stock usage increases, so we need proper regulatory and Inspection is required, attention must be paid to the structure. “

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