The centralized financial networks are getting more involved in the matter of regulating cryptocurrencies owing to their increasing popularity. At its peak last year, the aggregate cryptocurrency market cap was valued at $3 trillion.
The recent Terra Chain crash has sent the waves of concerns across the digital currency space, also driving some concerning remarks from state officials like Christine Lagarde, the president of the European Central Bank.
In her latest iteration about cryptocurrencies, she used the example of the Terra chain and claimed that the cryptocurrency markets are subject to massive volatility and speculation.
However, presently a similar stance seems to persist at the Federal Reserve, as visible from the statement of the Vice-Chair Lael Brainard.
Role of CBDCs and Stablecoins in the Development of Financial Payment Networks
Vice Chair Brainard presented her speech at the Committee for Financial Serves at the House of Representatives. Her speech also included the topics like role of stablecoins and CBDCs in comparison to the CBDCs.
Counting the merits of physical money, she claimed that people have the advantage of going to a Central Bank and have a safety net in terms of liquidity and credit risk.
Meanwhile, she shared the statistics that indicate that the percentage of fiat currency usage among citizens has dropped by 31%.
She further added that the drop is significant considering that the number rises to its current percentage from 20% within five years. The people who are opting in favour of pure digital transactions consist of 45 years percentile.
During her speech, Brainard claimed that fiat currencies offer protection to the consumers in the form of deposit insurance, Central Bank Liquidity, and also a firm regulatory framework that every regional bank must abide by.
In retrospect, she took a jibe at the stablecoins that do not offer any such facilities to the consumers and add counterparty risks instead.
She also believes that the popularity of private monies can result in undermining the influence of the Federal government over its people.
On the other hand, commenting on the matter of CBDCs, she claimed that the digital dollar could co-exist with stablecoins, cryptocurrencies, and other types of private coins.