Even after securing the required Congressional approval, a CBDC would take a long time to design and implement, the Federal Reserve Vice Chair has said.
- Federal Reserve Vice Chair Lael Brainard has stated to the House Committee on Financial Services that a central bank digital currency would take at least five years to build.
- White House and Congressional approval would be required.
- Brainard says launching a CBDC would ensure that stablecoins do not become the dominant form of US dollars.
Federal Reserve Vice Chair Lael Brainard has stated that implementing a central bank digital currency (CBDC) in the United States would likely take five years.
Five Years Upon Approval
The U.S. House of Representatives Committee on Financial Services held a hearing today with Federal Reserve Vice Chair Lael Brainard to examine the risks and benefits of a hypothetical U.S. CBDC.
While discussing a timeline for the implementation of a CBDC, Brainard said that if “Congress were to decide… to issue a central bank digital currency, it could take five years to put in place the requisite security features, the design features.”
That is why, according to Brainard, the CBDC question is more about anticipating the future of the U.S. financial system than meeting its current needs. She acknowledged there were risks to creating a CBDC, but pointed out there were also risks in not creating one.
One of these risks, she argued, was for stablecoins to “become the dominant form of US digital dollars.” She went on to explain this could possibly create a “fragmentation of the payment system.”
Among her concerns was that other central banks in Europe or China could issue digital analogues to cash unrivaled, which would threaten the U.S. dollar’s status as the global reserve currency. A recent report from the House Committee on Financial Services stated that more than 85% of central banks worldwide are currently researching CBDCs.
The Federal Reserve would need approval from Congress and the White House to proceed with the design and implementation of a CBDC.
Disclosure: At the time of writing, the author of this piece owned ETH, USDT, and several other cryptocurrencies.
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