Chief among the reasons the U.S. needs to have a digital dollar is that other countries are racing to issue their own central bank digital currencies (CBDC), Federal Reserve Governor Lael Brainard said on Friday, Reuters reported.
- Speaking at the Aspen Institute Economic Strategy Group, Brainard said, "The dollar is very dominant in international payments, and if you have the other major jurisdictions in the world with a digital currency, a CBDC offering, and the U.S. doesn't have one, I just, I can't wrap my head around that," according to the Reuters report.
- Earlier this month, Fed Chair Jerome Powell told a House committee a Fed report on CBDCs would come in early September as the central bank decides on the merits of issuing a digital dollar. Meanwhile, China is in the testing stage of its own CBDC.
- Closer to home, Brainard said the proliferation of stablecoins could fragment the payment system without a digital dollar, according to the report.
- A digital dollar could also help people without bank accounts to get government aid such as coronavirus pandemic relief payments, Reuters quoted the Fed governor as saying.
- Separately, Brainard said she doesn't see any signs that currently high inflation readings are pushing longer-term inflation expectations above the central bank's 2% target.