In remarks at an industry event today, Federal Reserve Governor Lael Brainard said that the Fed needs to be preparing for the payment landscape of the future even as it makes improvements to meet today’s needs. Brainard said that the Fed has been thinking critically about whether there is a role for a U.S. central bank digital currency and about potential costs and benefits, including through a recently issued research paper that is currently open for public comment.
She noted that it is prudent for the Fed to explore if a central bank digital currency could preserve some of the same and effective elements of the current financial system “in a way that is complementary to the private sector innovations transforming the financial landscape of the future.”
She added that it is essential that the U.S. be on the frontier of research and policy development regarding central bank digital currencies, as international developments related to central bank digital currencies can have implications for the global financial system.
The American Bankers Association has previously weighed in on the risks associated with issuing a U.S. CBDC, warning that the issuance of a CBDC could compete with bank deposits and limit banks’ ability to power economic growth. ABA is currently reviewing the Fed’s discussion paper on CBDC and will provide feedback.