Federal Reserve Vice Chair Testifies in Support of CBDC
“The recent turmoil in crypto-financial markets makes clear that the actions we take now – whether on the regulatory framework or a digital dollar – should be robust to the future evolution of the financial system,” she noted in her testimony.
The realities of stablecoins
Following Terra's implosion, she proceeded by emphasizing the "need for explicit regulatory guardrails."
Investors have been watching with bated breaths since Deus Finance's DEI token lost its peg, and Tether (USDT) temporarily traded for less than $1 for a few hours following the UST catastrophe.
During her testimony, Brainard slammed the idea that stablecoins don't have the same safeguards as commercial bank money, claiming that having these safeguards "may inject serious counterparty risk into the payments system."
Is a U.S. CBDC the next step forward?
Brainard told senators during a hearing on the Committee on Financial Services that she believes a CBDC in the United States might one day coexist with stablecoins.
She also encouraged the House panel to think about the consequences of issuing or not issuing a Central Bank Digital Currency (CBDC), implying that if the Federal Reserve were to issue one, it would prefer a non-interest-bearing CBDC or limit the amount an individual can keep or spend.
“In some future circumstances, CBDC could coexist with and be complementary to stablecoins and commercial bank money by providing a safe central bank liability in the digital financial ecosystem, much like cash currently coexists with commercial bank money,” she suggested.
Terra’s future on the blockchain
The ecosystem is already excited about what the future of Terra could look like, following Terra founder Do Kwon's plan to revitalize the blockchain by forking a new chain without UST.
On Wednesday, the plan was approved, which included an airdrop of fresh tokens to prior UST and LUNA owners.
According to rumors, exchanges are lining up to sell the new cryptocurrency, which is expected to skyrocket in value. Huobi, a cryptocurrency exchange, tweeted its support for Luna 2.0, while OKX did the same prior of the airdrop.
Binance, on the other hand, claimed cryptically that it would "work closely with the Terra team" to guarantee that users are treated properly.
Based on the flow of tokens, Andrew Thurman, content head at Nansen, believes that forecasts of a price surge are false. He believes, though, that as word spreads, such projections may change. According to several experts, listing on numerous markets would increase its liquidity.
The Terra founder rejected rumors that he approached five Korean exchanges to list LUNA 2.0 amid the frenzy of activity surrounding the network.
“Luna 2.0 will show the world just how truly dumb crypto gamblers really are,” Dogecoin founder Billy Markus tweeted.