Below is the prepared statement issued by Fed Vice Chair Lael Brainard published in advance of the House Committee on Financial Services hearing scheduled for later today. As was previously reported, Brainard will review the topic of Central Bank Digital Currencies (CBDCs) and the potential for a digital dollar.
As one may expect, Brainard states that no decision has yet been made as to whether or not the Fed will recommend a government issued CBDCs.
Brainard does note that in the stablecoin sector, it is obvious that new regulations are needed – especially in light of the spectacular collapse of TerraUSD (UST) and LUNA – an aspiring algorithmic stablecoin that failed in its mission to peg itself to the US dollar. The collapse wiped out hundreds of millions of dollars causing holders to lose all of their money.
Brainard does intimate that an “intermediated system,” where private intermediaries could enable digital currency may be effective in providing the benefits of a digital dollar while protecting individual privacy along with guarding against nefarious activity.
The statement is available below. The hearing commences at 12 Noon ET today (May 26, 2022).
