Fed Vice Chairman Lael Brainard said that central bank cryptocurrencies (CBDC) benefits and stablecoins can wreak havoc. The statements come at a time when the Terra ecosystem is dragging the altcoin market.
Lael Brainard will highlight that these altcoin projects are “useful”
Fed Vice Chairman Lael Brainard plans to tell House MPs on Thursday that CBDCs will one day be dealing with so-called stablecoins said that it can coexist and even complement:
In some future cases, the CBDC [central bank digital currency] will be used in the digital financial ecosystem, such as cash, which currently coexists with commercial bank money. it can coexist with and complement stablecoins and commercial bank money, providing a secure central bank liability.
Thursday’s announcements focused on private sector payment innovations, including stablecoins, a type of cryptocurrency the Fed intended to peg to the dollar or another national currency. It came as he was discussing a potential new form of money to keep up with.
Ms. Brainard will testify at noon before a House Financial Services Committee hearing on the benefits and risks of CBDCs.
Market learned an important lesson from TerraUSD
Stablecoins are a part of the value of TerraUSD, once one of the largest stablecoins It caught the attention of regulators again this month after seeing the dollar plunge far below it. About Terra, Brainard states in his prepared statement:
The recent turmoil in the crypto financial markets makes it clear that the steps we take now, whether on the regulatory framework or on the digital dollar, must be robust for the future evolution of the financial system.
CBDCs can help maintain the dollar’s global reserve status, adding:
The digital dollar is the way people around the world use the dollar to transact and do business in the digital financial system. This could be a potential way to ensure that they continue to rely on the strength and security of the US currency.
Lael Brainard thinks CBDCs can play a complementary role for stablecoins. Emphasizing the importance of cash, the Fed Vice Chairman says that as digital payment methods develop, less used cash can be supported by CBDCs. As a result, we can see that all payment systems move to the Blockchain base in the coming years, as can be understood from Brainard’s work.
