Brainard tells House committee about potential role of CBDC, future of stablecoins

cointelegraph.com:

United States Federal Reserve vice chair Lael Brainard submitted a written statement in advance to the Financial Services Committee's virtual hearing, "On the Benefits and Risks of a U.S. Central Bank Digital Currency (CBDC)," that took place Thursday. That was a sound strategic move, considering that more than 25 legislators lined up to ask questions. 

Brainard’s appearance before the committee came just after the close of the comment period for the Fed’s discussion paper, “Money and Payments: The U.S. Dollar in the Age of Digital Transformation.” However, recent events on the stablecoin market played a preemptive role in the framing of her statement.

Brainard acknowledged the position of stablecoins in the economy, saying in her written statement. She said:

In the Q&A, Brainard spoke in a conversation with Anthony Gonzalez of Ohio of “very robust regulation akin to bank-like regulation” to ensure the stability of stablecoins.

Two questions were touched on extensively in Brainard’s written statement and in the Q&A: the role of banks, and whether their role in the economy will be diminished even without disintermediation; plus the fragmentation of the payment system, and how a CBDC would affect the situation as it already exists.

In addition to those points, several of the participants pressed Brainard on the statement in the discussion paper that “The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.” Lawmakers wanted to know what non-ideal options the Fed would consider in deciding to issue a CBDC. The question was raised even by the final participant, Jake Auchincloss of Massachusetts.

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