Board of Governors of the Federal Reserve System ("FRB") Governor Lael Brainard outlined her opposition to the creation of a central bank digital currency.
In a speech before the Decoding Digital Currency Conference in San Francisco, Ms. Brainard argued that a central bank cryptocurrency would present an attractive target for cyberattacks and would require significant protections against an expected variety of cyber threats. She cautioned that if a central bank digital cryptocurrency became a substitute for retail banking deposits, it would limit banks' ability to "make loans for productive economic activities," and would impose "broader macroeconomic consequences." Attempting to keep both traditional currency and cryptocurrency could "raise the risk of runs on the banking system in times of stress and so have adverse implications for financial stability," she said.
Ms. Brainard asserted that there was "no compelling demonstrated need" for a central bank cryptocurrency. For example, retail payments can be made electronically already using debit and credit cards, payment applications and the automated clearinghouse network. She said the Faster Payments Task Force outlined a plan to implement "fast, ubiquitous, and secure payments systems" in the United States within the next few years.
Ms. Brainard noted that it is possible that a limited central bank digital instrument could serve as a settlement asset for wholesale payment and settlement activity in the future.
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