Federal Reserve Governor Lael Mindard laid out Friday a number of reasons why the U.S. needs a digital currency. This includes the fact that countries like China are developing their own.

Brainard stated that the dollar is the dominant currency in international payments. “If you have other major jurisdictions around the world with a cryptocurrency, a CBDC, central bank digital currency offering, and the U.S. does not have one, it’s just, I can’t get my head around it,” Brainard said to the Aspen Institute Economic Strategy Group. “That doesn’t seem like a sustainable future for me.”

Fed officials are conducting a deep dive on digital payments, gathering public feedback about the potential benefits and design considerations. They plan to publish a discussion paper in September.

In comments made earlier this month, Jerome Powell, Fed Chair, described the analysis to be a crucial step in accelerating Fed’s efforts in determining if it should issue its CDBC.

Brainard stated that Friday’s international use case is one of the most compelling. “Intermediation chains can be long and expensive and are opaque.” Brainard added.

She said that there are also domestic reasons for a U.S.-backed cryptocurrency. These include the dramatic rise of stablecoins, which is a cryptocurrency tied to a traditional currency like the U.S. dollars but not backed any government.

She said that stablecoins could spread and fragment the payment system or one or more could become dominant. In either case, you can imagine households and businesses losing access to safe, government-backed settlement assets in a stablecoin world. This is what currency has provided for them since its beginning.

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She suggested that a CBDC could be used to solve other problems such as the difficulty in obtaining government payments to those without bank accounts. These people are often the ones who most need them.