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Lael Brainard asks Congress to decide if to contend with China's digital yuan

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Lael Brainard said, “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." 

Lael Brainard, a member of the Federal Reserve Board of Governors, stated during her confirmation hearing to members of the Senate Banking Committee that Congress would eventually have to choose whether to pursue a  CBDC (Central bank digital currency).

On Thursday, Brainard told pro-crypto Senator Cynthia Lummis at the Dirksen Senate Office Building that the Fed would appreciate Congress "taking a very important role" in modernizing the regulatory structure for cryptocurrency and virtual assets. When asked if CBDCs could be used to monitor users' financial activity, as Lummis asserts it happens in China, Brainard delegated the choice to legislators.

"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. She also added, “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."

Brainard was appointed by President Joe Biden to become the Federal Reserve's next vice chair, after Richard Clarida, who declared on Monday that he planned to leave on Friday, as his tenure expires at the end of the month. If she gets more than 50 votes when her appointment is reviewed by the full Senate, she would be the Fed's vice chair until 2026.
The testimony of Brainard and Fed Chair Jerome Powell before senators occurred the same week that Minnesota Representative Tom Emmer proposed a bill preventing the Fed from releasing a CBDC straight to U.S. customers. Emmer thinks that requiring users to register accounts to reap the advantages of a virtual dollar would “put the Fed on an insidious path akin to China’s digital authoritarianism.”

Considering China's initiative in bringing its own CBDC, Brainard spoke in favour of the US releasing a digital dollar while her term at the Federal. She asked for a CBDC to be formed as soon as possible in July, stating she could not "wrap [her] head around" the US without having any with the fiat dollar's supremacy in international payments. She has also raised worries about cryptocurrencies such as Bitcoin's (BTC) “legal and regulatory safeguards, financial stability, and the role of currency in society.”

Following Clarida's resignation on Friday, at least 3 positions on the Federal Reserve's board of governors will be eligible for nominations from President Biden in 2022. The president of the United States is allegedly thinking of adding Duke University law professor Sarah Bloom Raskin to the group of 7 governors, which also includes economists Lisa Cook and Philip Jefferson.

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