Federal Reserve Vice Chair Testifies in Support of CBDC

Last month, the US Senate approved Brainard as the next vice-chair of the Federal Reserve, alongside Chair Jerome Powell. The recent meltdown of Terra (LUNA) has prompted regulators to seek tougher crypto fines after the stablecoin lost its peg, wiping out billions of dollars in investor cash. “The recent turmoil in crypto-financial markets makes clear that the actions we take now – whether on the regulatory framework or a digital dollar – should be robust to the future evolution of the financial system,” she noted in her testimony. The realities of stablecoins Following Terra’s implosion, she proceeded by emphasizing the “need for explicit regulatory guardrails.” Investors have been watching with bated breaths since Deus Finance’s DEI token lost its peg, and Tether (USDT) temporarily traded for less than $1 for a few hours following the UST catastrophe. During her testimony, Brainard slammed the idea that stablecoins don’t have the same safeguards as commercial bank money, claiming that having these safeguards “may inject serious counterparty risk into the payments system.” Is a U.S. CBDC the next step forward? Brainard told senators during a hearing on the Committee on Financial Services that she believes a CBDC in the United States might one day coexist with stablecoins. She also encouraged the House panel to think about the consequences of issuing or not issuing a Central Bank Digital Currency (CBDC), implying that if the ...