Federal Reserve Governor Lael Brainard said Tuesday night that a cryptocurrency from the Fed or another central bank could risk creating a global target for cyberattacks or provide a ready means of money laundering.
“There is no compelling demonstrated need,” Brainard told a digital currency forum at the Federal Reserve Bank of San Francisco.
While proponents of central bank cryptocurrencies have argued they would be more stable and reliable than Bitcoin and other digital currencies from the private sector, Brainard said they could very well be wrong.
In addition to the cybercrime and money laundering risks, the Fed Governor said the technological challenges to creating a central bank cryptocurrency would be immense.
In her prepared text, she added that even a successful central bank cryptocurrency could create harm.
“It could become a substitute for retail banking deposits. This could restrict banks' ability to make loans for productive economic activities and have broader macroeconomic consequences,” Brainard said.
The Fed Governor said consumers are already well served by debit cards, credit cards and mobile payment options.
“A multiplicity of mechanisms are likely to be available for American consumers to make payments electronically in real time. It is not obvious what additional value a Fed-issued digital currency would provide over and above these options,” she told the cryptocurrency forum.