Brainard appears before a committee on CBDC’s potential role and stablecoins’ future
Lael Brainard, the vice-chair of the US Federal Reserve, sent a written document to the virtual hearing of the Financial Services. The statement is on the risks and benefits of the United States CBDC. The move was a strategic one, as over twenty-five legislators had relevant queries.
Brainard’s appearance was significant, as it was right after a crucial Federal discussion paper. The latest developments in the stablecoin space had a crucial role to play in her written statement.
The vice-chair spoke to Ohio’s Anthony Gonzalez in the Question & Answer session about the bank-like rules for ensuring stablecoins stability. The banks’ roles and if their importance in the future economy might go down or not were also discussed during the Q&A session.
Role of stablecoins
According to a blog post by the Federal Reserve Bank of New York, stablecoins may not be the future of payments. This is despite their increasing market value in the last couple of years.
Some analysts feel that stablecoins, which are backed by liquid and safe assets, tie up liquidity unnecessarily. Thus, they are unavailable in the banking system for other uses.
The second type of stablecoins is not backed fully and is like the private bank noted. However, these have failed miserably in the past.
Economists in general feel there are multifold benefits of stablecoins. These include them being safe, more competitive, real-time, and lower-cost payments as compared to what businesses and consumers experience today.