Fed's Brainard Views Cost-Benefit of Negative Rates Unattractive

Fed's Brainard Views Cost-Benefit of Negative Rates Unattractive

(Bloomberg) -- Federal Reserve Governor Lael Brainard said she views “the cost-benefit assessment of negative rates as unattractive for the current U.S. context” despite arguments that digital currencies could help address the problems of the zero lower bound on interest rates.

  • “Some economists have argued that a central bank digital currency could address the problems posed by the zero lower bound by potentially transmitting monetary policy directly to the public,” Brainard said Wednesday in the text of a speech. “My own strong preference is to address the effective lower bound by using our existing tools vigorously”
  • Brainard comments in text of remarks given in Washington focused on the future of money
  • “Global stablecoin networks should be expected to meet a high threshold of legal and regulatory safeguards before launching operations,” Brainard says
  • Fed is monitoring new technologies including Facebook’s Libra closely
  • “While prudence cautions against rushing into untested approaches to central bank digital currencies, we are actively investing in our payments infrastructure, so that everyone has access to real-time payments,” she says
  • Brainard reiterates that U.S. central bank will develop the FedNow Service as a platform for consumers and businesses to send and receive payments immediately
  • Read more: Fed Drags Feet as Digital Money Revolution Tests Central Banks

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