The Fed Fires Shots At Libra: FedNow Will Provide Instant Payments Without Bypassing Regulations
In a speech given on Thursday, Lael Brainard, the Federal Reserve governor canvassed on various financial issues in the United States and the world and the issue of stablecoin like Libra was raised.
The Facebook led project that was launched last year with lots of publicity, has been said to fuel the clamor by central banks in the world to develop their own digital currencies. Libra has also elicited criticism across the world with some financial regulators vowing to never allow the stablecoin to operate within their borders.
Jerome Powell,the Fed’s chair, explained to Congress that Libra ‘really lit a fire’ in regards to the works of the US central bank.
On her part, the Fed governor has previously stated that they are working with several central banks across the globe to come up with a way of introducing central banks issued digital currencies (CBDC).
Brainard’s speech majorly talked on FedNow which is a platform that is being created by the Fed which will allow financial institutions in the country to make instant payments. Brainard stated that most of the core aspects of the platform have been approved by the Federal Reserve Board.
Brainard’s speech also touched on the future of payment systems in the wake of advanced technology. She stated that stablecoin network projects such as Libra have raised fundamental issues on regulatory standards, financial stability as well as the aim of private money in the world. She stated:
“Efforts by global stablecoin networks such as Facebook's Libra project to drive the next stage of payment innovation have raised other fundamental questions about legal and regulatory safeguards, financial stability, and the appropriate role of private money.”
The speech seems to explain some of the key projects being undertaken by the Federal Reserve when it comes to payments. Brainard stated that the Fed remains optimistic that technology as well as innovation will be used to deliver payments instantly, safely as well as efficiently. She however cautioned that the right safeguards must be developed for the technology to work swiftly.