Fed's Lael Brainard invites Congress to choose whether to compete with China's digital yuan
At her confirmation hearing in front of members of the Senate Banking Committee, Federal Reserve board of governors member Lael Brainard said Congress would ultimately have to decide to move forward with a central bank digital currency, or CBDC.
Addressing pro-crypto Senator Cynthia Lummis at the Dirksen Senate Office Building on Thursday, Brainard said the Fed would welcome Congress “taking a very important role” in updating the regulatory framework for cryptocurrencies and digital assets. When questioned as to the possible use of CBDCs to surveil users' financial activities — as Lummis alleged happens in China — Brainard again deferred the decision to lawmakers.
"This question about digital currency — it's a big question — we really are looking to Congress [in deciding to make CBDCs available to retail customers] and the administration to give us guidance in this area,” said Brainard. “We want to make sure that we do the requisite research on policy and technology so we're in a position to move forward if Congress decides it's important to be able to compete with China in this regard. Of course, privacy protections are very important in any kind of approach that might be taken."
Nominated by President Joe Biden to become the next vice chair at the Federal Reserve, Brainard is replacing Richard Clarida, who announced on Monday he intended to resign on Friday ahead of his term expiring at the end of the month. Should she receive more than 50 votes once her nomination goes to the full Senate, she would serve as the Fed vice chair until 2026.
Brainard’s and Fed chair Jerome Powell’s testimony before senators came the same week Minnesota Representative Tom Emmer introduced a bill aimed at prohibiting the Fed from issuing a CBDC
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