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Fed Governor: Not Having A Digital Dollar Is Not An Option Anymore

It is clear that the next big economic dominance will depend a lot on the central bank digital currencies (CBDCs), and the top two economies – the U.S. and China – are taking the battle to the next level.

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Last Friday, July 30, Fed Governor Lael Brainard stressed that not having a Digital Dollar in place is no more an option. Brainard note several reasons of “urgency” behind this issue, reports Reuters. Speaking to the Aspen Institute Economic Strategy Group, Brainard said:

“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. That just doesn’t sound like a sustainable future to me.”

Probably by this month-end, the U.S. central bank might release the official research paper on CBDC aka the U.S. Digital Dollar. The Fed has involving itself to a great extent in the digital currency universe.

Even Federal Reserve Chairman Jerome Powell has been keen on this matter! Last month in July, the Fed Chairman gave a press statement stating that the world won’t need public cryptocurrencies once they have the Digital Dollar.

Combating the Rising Clout of Stablecoins

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One more thing that’s making the Fed nervous is the rising clout of stablecoins aka the fiat-pegged cryptocurrencies. The Fed governor noted that these stablecoins aren’t backed by any government.

Lael Brainard further added that stablecoins can fragment and proliferate the financial system. She added:

“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.”

Besides, she adds that CBDCs can play a key role in passing the stimulus benefits, especially during the time of such a pandemic. Explaining further importance, she stated: “One of the most compelling use cases is in the international realm, where intermediation chains are opaque and long and costly”.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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