Digital payments and the growth of private money are two factors helping drive an increasing focus on central bank digital currencies (CBDCs), said Federal Reserve Governor Lael Brainard.
A number of policy considerations remain before the U.S. can assess issuing a digital dollar, she said, speaking at CoinDesk’s Consensus 2021 on Monday. They include: preserving access to “safe central bank money,” increasing financial inclusion, payment and clearing efficiency, reducing cross-border frictions, complementing bank deposits and protecting both financial stability and personal privacy.
“I do believe that in the context where we maintain the role of safe central bank money as a foundation for the payment system, there’s a lot of room for competition and innovation to flourish,” she said.
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While Brainard praised innovation, she said any regulatory framework must evolve and be shared across the different agencies with jurisdiction over the digital asset sector. Further, she said the U.S. should help develop the standards around cross-border payment systems, which CBDCs could provide.