Fed’s Lael Brainard says US urgently needs a CBDC

Governor reportedly said it is a matter of “urgency” for US to have digital currency

US Federal Reserve Bank building,Washington                                 
US Federal Reserve,Washington DC – Photo: Shutterstock
                                

US Federal Reserve governor Lael Brainard has reportedly spoken out strongly in favour of a central bank digital currency (CBDC) while speaking at the Aspen Institute’s Economic Strategy Group – and that it is a matter of “urgency” for the US central bank to develop 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 offering, and the US doesn't have one, I just, I can’t wrap my head around that. That just doesn't sound like a sustainable future to me,” said Brainard according to Reuters.

The remarks come at a time when other countries are already stepping up their efforts to develop a CBDC. Only last month, the People’s Bank of China issued an update on the progress it has made into developing a digital currency known as the e-CNY.

Americans less in favour of a CBDC

Despite the governor’s words, US citizens are not as enthusiastic about the idea of a CBDC, especially when compared with other nations.

The Estonian blockchain company Guardtime published a report which showed that 64% of consumers from different nations would be likely to use a CBDC. However, 20% of Americans said they would never use a CBDC.

Countries exploring CBDCs doubled since 2020

Since 2020, the number of countries looking in to a Central Bank Digital Currency (CBDC) has doubled, with 81 countries now actively exploring the notion of a CBDC, according to the Atlantic Council’s GeoEconomic Center CBDC tracker.

Out of these, five have fully launched CBDCs, with The Bahamas being the first to do so. Of the remaining 76 countries, 33 are researching the idea, 15 are in development and 14 are in pilot stage.

Josh Lipsky, director of the GeoEconomics Center and former senior adviser at the International Monetary Fund (IMF), said: “Before COVID-19, central bank digital currencies were largely a theoretical exercise. But with the need to distribute unprecedented monetary and fiscal stimulus around the world, combined with the rise of cryptocurrencies, central banks have quickly realised they cannot let the evolution of money pass them by.”

Currency.com contacted the US Federal Reserve for a comment on the matter but received no reply. 

Further reading: South Korea and Ghana move even closer to launching CBDCs

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