Federal Reserve Governor Brainard Lists 'Urgent' Reasons For US Digital Currency

Federal Reserve Governor Lael Brainard believes that the need for a central bank digital currency in the U.S. is imminent.

What Happened: According to a report from Reuters, the Federal Reserve Governor was particularly concerned about the U.S. lagging behind while other countries such as China move ahead with their central bank digital currency rollout.

Speaking at the John F. Kennedy School of Government at Harvard University, Brainard said the issue of developing a U.S. central bank digital currency was an urgent one.

"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 (central bank digital  currency) offering, and the U.S. doesn't have one, I just, I can't wrap my head around that," said Brainard to the Aspen Institute Economic Strategy Group.

"That just doesn't sound like a sustainable future to me."

What Else: Another issue that concerns Brainard is the “dramatic rise in stablecoins,” which she believes poses a threat to the existing financial payment system.

Brainard was referring to the growth of digital currencies pegged to the value of the U.S. dollar like Tether USDT/USD and USD Coin USDC/USD that have amassed a market cap of $62 billion and $27 billion, respectively.

"In a world of stablecoins you could imagine that households and businesses if the migration away from currency is really very intense, they would simply lose access to a safe government-backed settlement asset, which is of course what currency has always provided," she said.

Earlier this year, China conducted several CBDC trials after clamping down on private cryptocurrency mining and trading in the country.

Officials from Beijing also went on to advise U.S. Senators to “educate themselves about what a digital currency is” in response to a call for restrictions on the use of  China's digital yuan by American Olympic athletes during the Bejing Winter Olympics.

Price Action: At press time, the market-leading cryptocurrency Bitcoin BTC/USD was trading at $39,799, up 4% in the past 24-hours.