Fed’s Lael Brainard wants Congress to make a decision on CBDC

Lael Brainard stated before the Senate Banking Committee that Congress should determine whether or not to work on CBDC.
Lael Brainard stated before the Senate Banking Committee that Congress should determine whether or not to work on CBDC.

Lael Brainard, a member of the Federal Reserve (Fed) Board of Governors, stated during her confirmation hearing before the Senate Banking Committee that Congress should determine whether or not to work on the central bank digital currency (CBDC).

On Thursday, Brainard told pro-crypto Senator Cynthia Lummis that the Fed would appreciate Congress taking a critical role in modernizing the regulatory framework for cryptocurrencies and digital assets. When asked about the possibility of using CBDCs to monitor users’ financial activity, as Lummis claims happened in China, Brainard left the decision to lawmakers once more.

Brainard stated, “This question about digital currency — it’s a big question — we really are looking to Congress [in deciding to make CBDC available to retail customers] and the administration to give us guidance in this area.”

She went on to add that the Fed wants it clear that it does the requisite research on policy and technology. Therefore, the bank is in a position to move forward if Congress decides it’s critical to compete with China in this matter. 

In September 2021, the chair of the bank Jerome Powell said that the Fed is not in a rush to roll out CBDC.

Brainard will serve as Fed vice chair until 2026 if she receives over 50 votes when her nomination advances to the full Senate.

Brainard personally seems to be in favor of CBDC

Given China’s lead in rolling out its own CBDC, Brainard has pushed for the U.S. to issue a digital dollar during her term at the Fed. She asked for a Federal Reserve digital currency to be developed as soon as possible in July, saying she couldn’t “wrap [her] brain around” the U.S. not having one given the fiat dollar’s supremacy in international payments. She has also raised worries about crypto like Bitcoin’s “legal and regulatory safeguards, financial stability, and the role of currency in society.” 

Before this, in December last year, U.S. Treasury Secretary commented on CBDC development and said that the nation would only proceed with the development after broad-based consensus.