The move toward a form of government-backed digital currency is being driven by Fintech firms and a banking industry already piloting or planning to pilot cash-backed digital tokens, according to Lael Brainard, a member of the U.S. Federal Reserve’s Board of Governors.
“Today, it can take a few days to get access to your funds. A real-time retail payments infrastructure would ensure the funds are available immediately – to pay utility bills or split the rent with roommates, or for small business owners to pay their suppliers,” said Brainard, who serves as chair of the committees overseeing Financial Stability and Payments, Clearing and Settlements.
Immediate access to funds could be especially important for households on fixed incomes or living paycheck-to-paycheck, when waiting for funds to be available to pay a bill can mean overdraft fees or late fees that compound. Similarly, for small businesses, immediate access to funds from a sale to pay for supplies can be a game-changer, Brainard added.
“The reality is that crypto currencies have highlighted a global systemic problem in banking: in a world that now operates on a 24/7/365 mindset, how can business stay current when they are forced to use an 8-hour banking day?” Poute said.