Lael Brainard: The digitalization of payments and currency - some issues for consideration

Speech by Ms Lael Brainard, Member of the Board of Governors of the Federal Reserve System, at the Symposium on the Future of Payments, Stanford, California, 5 February 2020.

Central bank speech  | 
05 February 2020
PDF full text
 (71kb)
 |  14 pages

I want to thank Darrell Duffie for inviting me to discuss the future of payments. Digitalization is enabling consumers and businesses to transfer value instantaneously, technology platforms to scale up rapidly in payments, and new digital currencies to facilitate these payments. By transforming payments, digitalization has the potential to deliver greater value and convenience at lower cost. But there are risks. Some of the new players are outside the financial system's regulatory guardrails, and their new currencies could pose challenges in areas such as illicit finance, privacy, financial stability, and monetary policy transmission.

Given the stakes, the public sector must engage in order to ensure that the payments infrastructure is safe as well as efficient and fast, assess whether regulatory perimeters need to be redrawn or new approaches are needed in areas such as consumer data and identity authentication, and explore the role of central bank digital currencies in ensuring sovereign currencies stay at the center of each nation's financial system. These issues are complicated and consequential. I will only touch on them today in the spirit of sketching out an agenda for the public sector along with the private sector and research community.

Digital Players

Technology firms-from BigTechs to FinTechs-are driving the digital transformation of payments.