Fed Reviews Feasibility of Central Bank Digital Currency Implementation

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Lael Brainard, a member of the U.S. Federal Reserve (Fed) Board, said on the 5th (local time) that the Fed is exploring the feasibility of a central bank digital currency (CBDC).

According to Bloomberg News and others, Brainard made this remark during a speech at a conference held at Stanford Graduate School of Business. He stated, "Considering the importance of the dollar, it is very important that we remain pioneers in policy development and research on (CBDC)," adding, "We are conducting research and experiments on potential use cases of digital currency and distributed ledger technology."

Bloomberg reported that this statement indicates the Fed is taking a closer look at CBDC. The Bank for International Settlements (BIS) and the International Monetary Fund (IMF) had previously requested central banks to study digital currencies. Following the People's Bank of China’s plan to issue digital currency, Facebook is also pushing forward with issuing its own virtual currency, Libra.

Brainard also said, "Because Facebook has an active user network comprising one-third of the world's population, the urgency of discussions on (digital currency) has increased due to Facebook's Libra project." He further mentioned that before the U.S. decides to issue a CBDC, research should be conducted on cost reduction effects, operational vulnerabilities, account assignment entities, and supervisory authorities.

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