Federal Reserve governor Lael Brainard. Photo: Taylor Glascock/Bloomberg via Getty Images
Despite much fanfare in recent months, the U.S. looks to have made minimal progress on the development of or consensus around a central bank digital currency (CBDC), despite advances from other central banks, including China's.
Driving the news: Fed governor Lael Brainard, who is leading efforts on a digital currency as the governor in charge of financial stability, delivered a speech on Monday detailing the state of research and development on CBDCs in the U.S. but provided little new information.
- She also continued to highlight potential risks like financial system fragmentation and consumer protection and financial stability risks.
Between the lines: Brainard occasionally deviated from her prepared remarks during her appearance at CoinDesk’s Consensus 2021 event, including a mention that it was important for Fed policymakers "to follow many central banks' progress on CBDC closely — including China."
- She also stressed that "we are at the table" as she noted, "Given the potential for CBDCs to gain prominence in cross-border payments and the reserve currency role of the dollar, it is vital for the United States to be at the table in the development of cross-border standards."
State of play: The Fed is behind other central banks in developing a digital currency, and not just China, which began testing a digital version of the renminbi with brick-and-mortar retailers last year and recently expanded to include the e-renminbi in digital wallets linked to Alibaba's Ant Group.
- Sweden's Riksbank is testing a digital e-krona, and the Bank of Japan is testing a digital yen.
What's next: Fed chair Jerome Powell recently announced that the Fed would issue a discussion paper "outlining our current thinking" on digital currencies in July.