MNI BRIEF: Yellen - CBDC Would Be Major Challenge Taking Years

Treasury Secretary Janet Yellen said Thursday a U.S. central bank digital currency could succeed at being more widely used as a means of exchange, but raises potential risks for a currency that is inherently cross-border and requires international cooperation.

"We have a strong interest in ensuring that innovation does not lead to a fragmentation in international payment architectures," she said. "I don’t yet know the conclusions we will reach, but we must be clear that issuing a CBDC would likely present a major design and engineering challenge that would require years of development, not months," she said, adding she shares President Biden's urgency to pull forward research to understand the challenges and opportunities a CBDC could present to American interests.

More government regulation is needed for "responsible innovation" and to police the proliferation of cryptocurrency and other digital assets and to ward off fraudulent and illicit transactions, Yellen said at American University, in her first speech about cryptocurrency since President Joe Biden signed an executive order on digital assets in March.