Fed’s Brainard Says Central Bank Stepping Up Exploration Of Digital Dollar

By Jonnelle Marte and Howard Schneider

As the holder of the world’s reserve currency, the United States must be highly involved as digital payments become more common and other countries develop digital currencies that can be used to send money across borders, she said.

“The Federal Reserve is stepping up its research and public engagement on a digital version of the U.S. dollar,” Brainard said in remarks prepared for a virtual event organized by CoinDesk.

The central bank must also anticipate changing consumer trends and ensure that Americans have access to “safe central bank money” as digital payments become more popular, Brainard said.

The increased availability of digital payment options from private companies also threaten to “fragment” the payment space in a way that could create friction and lock some consumers out, Brainard cautioned.

Major policy questions and technology issues will need to be addressed before the U.S. government can move forward with a digital currency that is inclusive and safe, Brainard said. Policymakers will also need to strike a balance in developing a digital currency that offers households privacy while also preventing illicit activities, she added.

(Reporting by Jonnelle Marte and Howard Schneider; Editing by Andrea Ricci)