Once again a Fed member has commented on digital currencies.
They are slightly behind the curve as the People Bank of China (PBoC) and the European Central Bank (ECB) have already started working on Central Bank Digital Currencies (CBDC).
This is one of the first times that the Fed has said it is possible though. Before they just said they were conducting research and were looking into stablecoins.
The Federal Reserve is looking at a broad range of issues around regulations and protections for digital payments and currencies, including the costs and potential benefits of issuing its own digital currency – Governor Lael Brainard.
She went on to say:
By transforming payments, digitalization has the potential to deliver greater value and convenience at lower cost
But there are risks
Some of the new players are outside the financial system’s regulatory guardrails, and their new currencies could pose challenges in areas such as illicit finance, privacy, financial stability, and monetary policy transmission
Still the same old issues at the moment then for the worlds central banks. Terrorist financing, AML and privacy have been cited over and over again for the last few years. The first central bank to solve these issues will surely win the race to make a digital currency.
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