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The US Federal Reserve took a step toward developing a digital currency as it announced plans to publish a research paper on the subject. The aim is to gather public comment and get the US play a "leading role" in the development of international standards, said Fed chairman Jerome Powell in a video message. "To help stimulate broad conversation, the Federal Reserve Board will issue a discussion paper this summer outlining our current thinking on digital payments, with a particular focus on the benefits and risks associated with CBDC in the U.S. context," Powell said. "As part of this process,...

I reported over the weekend an unusual video surrounding digital currencies that Federal Reserve chairman Jay Powell made last week: Federal Reserve Board Chairman Powell in Unprecedented Video Issues Commentary on Digital Currencies. Now we have Federal Reserve Board Governor Lael Brainard following up this morning with a speech on digital currencies via webcast at the Consensus by CoinDesk 2021 Conference, Washington, D.C. that even includes reference to an MIT-Federal Reserve test of a central bank digital currency. This morning she told the group:

Federal Reserve Governor Lael Brainard pressed the case for a digital dollar, saying Monday that a cryptocurrency backed by the central bank could provide a variety of benefits. Providing financial services to the nearly 1 in 5 Americans considered “underbanked” is one of the advantages Brainard cited in a speech to a conference presented by Coindesk. She also cited the safety of a Fed-backed system, as well as improvements in efficiency and cross-border payments, or transactions between people in different countries. While stressing the importance of moving forward carefully, Brainard said the Covid-19 pandemic strengthened the need for a system...