Fed Governor Says ‘No Compelling Need’ for US Central Bank Crypto
Lael Brainard, member of the board of governors at the U.S. Federal Reserve, has said she does not see a “compelling” need for a Fed-issued digital currency.
Speaking at the Decoding Digital Currency Conference yesterday in San Francisco, Brainard said that, while central bank digital currencies may seem to address a number of challenges associated with cryptocurrencies, they “may not withstand closer scrutiny.”
Further, with people finding easier ways to exchange digital payments directly through mobile applications and other means, American consumers are likely to receive multiple ways of making electronic payments in real-time.
“Finally, there is no compelling demonstrated need for a Fed-issued digital currency.”
Elsewhere in the speech, Brainard once again made it clear that she believes that cryptocurrencies not pose a threat to financial stability.
She noted that the central bank is actively monitoring developments in cryptocurrencies in areas such as payments policy, supervision and regulation, financial stability, monetary policy and more.
Discussing security concerns with respect to cryptocurrencies, including breaches and fraudulent activities, Brainard said:
“However, the still relatively small scale of cryptocurrencies in relation to our broader financial system and relatively limited connections to our banking sector suggest that they do not currently pose a threat to financial stability.”
The governor continued to say that adverse developments and shifts in the cryptocurrency market might lead to extreme price fluctuations, trading difficulties or even market breakdowns. In order to prevent such activities, Brainard stressed that Fed Reserve “will continue to monitor cryptocurrencies as they evolve, with particular vigilance for any signs of growing materiality to the broader financial system.”
As noted, this not the first time the Fed governor has spoken on the subject of cryptocurrencies. In April of this year, Brainard cautioned individual investors to be aware of the “possible pitfalls of these investments and the potential for losses.” She said at the time that Fed “is monitoring is the extreme volatility evidenced by some cryptocurrencies.”
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