Senator Sherrod Brown (D-OH) is encouraging the Federal Reserve to take a closer look at a possible digital dollar.
In a March 1 letter to Chair Jerome Powell and Governor Lael Brainard, Brown said he strongly supports the central bank’s study of central bank digital currency (CBDC).
“The Federal Reserve must lead the way on CBDCs and other digital payments, just as the Federal Reserve has done in moving forward with its faster payments system, FedNow,” read Brown’s letter.
The letter, dated March 1, warns that private actors and other nations are attempting to dominate the payment system, meaning the Fed must move swiftly to avoid being “left behind.”
It also points to companies’ recent bitcoin purchases as a sign of the times. Brown said bitcoin and other “non-sovereign crypto assets” pose monetary policy and climate risks.
“They are highly volatile and speculative, can be used for illegal activity, and consume incredible amounts of energy, driving up electricity use rates, and putting the resilience of local grids at risk,” said the letter.
Brown also pointed to Facebook’s Libra, now renamed Diem, as a possible threat to the regulatory regime. Regulating private actors is not enough to curb the threat, according to Brown.
“But the Fed must not stop at regulating a privately-issued digital currency,” said his letter. “It must go further and explore a publicly issued digital dollar.”
Brown also reiterated Treasury Secretary Janet Yellen’s digital dollar sentiments. Yellen recently said a CBDC could further financial inclusion in America despite her concerns about other digital assets.
Last year, Brown put forth a digital dollar bill in the Senate to advance the issue. The Banking for All Act would issue a digital wallet called a “FedAccount” to residents. Government payouts would be deposited to these accounts in digital dollars, and residents could use them for basic banking purposes, like direct deposit, withdrawal and payments.
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