On May 26, three days into her term as Vice Chair of the Federal Reserve, Lael Brainard testified about the Federal Reserve’s Examination of the Benefits and Risks of a U.S. Central Bank Digital Currency (CBDC) before the House Committee on Financial Services. Vice Chair Brainard’s comments reinforced many of the themes from the Fed’s January 2022 discussion paper [1], echoing the need for “clear regulatory guardrails to provide consumer and investor protection” in the rapidly developing digital assets markets while the Federal Reserve considers whether future conditions may give rise to the need for the United States to adopt a CBDC.
Vice Chair Brainard highlighted some potential benefits of a U.S. CBDC. She noted that given the volatility of private stablecoins and other cryptocurrencies,[2] widespread use of these risky monies may precipitate a need for a safe central bank liability in the digital asset ecosystem. A…
