"Expanding Digital Dollar Research" Fed Again "Stoking the Fire" for Digital Currency

Brainard Fed Director Speaks at Cryptocurrency Media Event
Foresees Fed-Led Digital Payment System Introduction
Targets China: "Reserve Currency Nation Must Lead Digital Currency"
"Cryptocurrencies Pose High Risks and Threaten Payment System Unity"
Repeats Claim Inflation Concerns Are Temporary

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Lael Brainard, a member of the U.S. Federal Reserve (Fed) Board, emphasized the necessity of introducing a digital dollar (CBDC), stating that research on a central bank-level digital dollar is underway.

She also expressed the opinion that the United States, as the issuer of the global reserve currency, should lead the adoption of digital currency.

Brainard's remarks are interpreted as the Fed having effectively decided to introduce a digital dollar and prepared a stance that it cannot fall behind in competition with countries like China.

On the 24th (local time), Brainard spoke at an event hosted by cryptocurrency media CoinDesk, introducing that "the Fed is strengthening public sector involvement and research for the digitalization of the dollar."

She suggested that the United States, as the global reserve currency country, should actively engage in a digital payment system that can remit funds to other countries. This implies that the U.S. is considering the introduction of a digital dollar to maintain its status as the global reserve currency amid China's active adoption of the digital yuan.

She particularly emphasized that the digital dollar, not existing cryptocurrencies, should be used for payment settlements, stating, "Payment innovation should be based on improving the current payment system."

Brainard pointed out that current cryptocurrencies have risks such as fraud, saying, "The digital dollar, a central bank-issued currency in digital form, can reduce various risks."

She warned, "If stablecoins (cryptocurrencies pegged to the dollar) become widely used and form the basis of alternative payment systems, the payment system could face the risk of fragmentation."

While emphasizing that the introduction of the digital dollar should be done cautiously, Brainard said, "The COVID-19 pandemic has expanded the need for the public to access well-regulated digital currencies."

Brainard cited the significant time it took for the U.S. government to distribute cash to citizens for economic recovery as an example, explaining that if a digital dollar had existed, cash could have been distributed much faster.

She also said, "One advantage of the digital dollar is that it can provide financial services to the 20% of Americans who do not benefit from banks."

Brainard explained that during the COVID-19 situation, many consumers and businesses used contactless payments through electronic payments, acknowledging that the digitalization of payment systems is a trend.

CNBC noted that Brainard's remarks came shortly after Fed Chair Jerome Powell mentioned that a report on the introduction of a digital dollar would be released by summer.

Brainard also reiterated her view that the rise in inflation is temporary.

She forecasted, "Higher inflation is expected in the short term for several months, but it will gradually resolve as some bottlenecks are resolved."

This content was produced with the assistance of AI translation services.