Fed’s Lael Brainard invites Congress to choose whether to compete with China’s digital yuan

Fed's Lael Brainard invites Congress to choose whether to compete with China's digital yuan

Lael Brainard, a member of the Federal Reserve board, stated that Congress would eventually have to make a decision to approve centralized bank digital currencies, or CBDC, at her confirmation hearing before members of Senate Banking Committee.

Brainard addressed Cynthia Lummis, a pro-crypto senator at the Dirksen Senate Office Building, on Thursday. He said that the Fed would be happy for Congress to “take a very important part” in updating the regulatory framework regarding cryptocurrencies and digital assets. Brainard deferred to lawmakers when he was asked about the possibility of CBDCs being used to monitor users’ financial transactions, as Lummis claimed happens in China.

Brainard stated that the question of digital currency is a huge one. He said that Congress would be looking for guidance and direction in this area. “We want to ensure that we do the necessary research on technology and policy so we can move forward if Congress decides to be able compete with China in this area. Privacy protections are essential in any approach.

Lael Brainard addresses Senator Cynthia Lummis Thursday

President Joe Biden nominated Brainard to be the Federal Reserve’s next vice chair. He replaces Richard Clarida who announced Monday that he would resign Friday, just before his term ends at the end. She would be the Fed vice-chair until 2026 if she gets more than 50 votes after her nomination is sent to the full Senate.

Brainard and Fed chair Jerome Powell gave testimony to senators the same week that Minnesota Representative Tom Emmer introduced legislation to prohibit the Fed from issuing CBDCs directly to U.S. citizens. Emmer stated that the Fed would require its users to open accounts in order to receive the digital dollars’ benefits. This is similar to China’s digital authoritarianism.

Related: Hong Kongers use Blockchain to Save Evidence of Anti-Authoritarian Struggles

Brainard, who has been a Fed official for over a decade, has argued in favor of the U.S. issuing an electronic dollar. This was in response to China’s lead in launching its CBDC. She called for the establishment of a CBDC in July. This was in response to China’s lead in rolling out its own CBDC. Concerns about cryptocurrencies such as Bitcoin (BTC) have also been expressed by her, including “legal and regulatory safeguards and financial stability” and the role of currency within society.

After the resignation of Clarida, President Biden will open nominations for at least three seats on the Federal Reserve’s board governors in 2022. According to reports, the President of the United States is considering Sarah Bloom Raskin, a Duke University law professor, to join the seven governors along with economists Lisa Cooke and Philip Jefferson.

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