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Brainard explained that the Covid-19 pandemic highlighted
Insider’sreport the need for broad public access to "well-regulated" digital
monies. "The challenges of getting relief payments to
on payments [unbanked and underbanked] households highlighted the
benefits of delivering payments more quickly, cheaply and
seamlessly through digital means," she said.
Are crypto payments Expected benefits of a CBDC include eliminating friction
in payments clearing and settlement, domestically
and across borders, and lower costs. "The introduction
in the cards? of a CBDC may provide an important foundation for
beneficial innovation and competition in retail payments
in the United States," Brainard said. She was insistent that
By Patti Murphy CBDCs "should complement and not replace currency and
ProScribes Inc. bank accounts."
I Brainard also said a CBDC would eliminate many of
remember when I first began looking into crypto-
the risks associated with private cryptocurrencies, like
currencies. It was 2013 and Bitcoin, which some
Bitcoin, with backing by a central bank. In addition to the
likened to the Beanie Baby craze, had skyrocketed in
price from less than a penny per coin to just under
Bank of China) are considering moves to their own digital
$100 in the space of about three years. The Green Sheet had Fed, several other central banks (including the Central
currencies.
asked me to look into this phenomenon for an article, so
I purchased one Bitcoin to better understand the experi- Visa, Mastercard, PayPal
ence.
Meanwhile, Mastercard and Visa are moving to support
I sold the coin when it hit $1,000, and Bitcoin since has cryptocurrencies on their settlement platforms. Visa has
swung wildly in value, between a few thousand dollars to a pilot going that supports settlement in USD Coin, a
more than $60,000. Had I held onto that $100 investment, stablecoin backed by the U.S. dollar. Mastercard stated it
it would be worth a bundle today. So, I see the appeal of has similar plans in the works.
cryptocurrencies as investments. But I don't quite get the
appeal of transacting in cryptocurrency. "Our philosophy on cryptocurrencies is straightforward:
it's about choice," Raj Dhamodharan, Mastercard executive
Yet, if recent headlines are an indication, the vice president for blockchain and digital asset products
mainstreaming of cryptocurrencies is happening. It may and partnerships, wrote in a recent blog post. "Mastercard
not be as commonplace as cash, cards or even checks, but isn't here to recommend you start using cryptocurrencies.
crypto payments are in the cards. But we are here to enable customers, merchants and
Both Visa and Mastercard are interested in businesses to move digital value – traditional or crypto –
cryptocurrencies. So are fintech disruptors like PayPal. however they want."
And central banks, too.
PayPal is gung-ho on cryptocurrencies, too. In 2020,
Fed report due out in summer the company revealed consumers can use their PayPal
In remarks before a crypto conference in May 2021, accounts to buy, sell and hold four of the most popular
Federal Reserve Board Governor Lael Brainard said the cryptocurrencies in increments as low as $1. In March of this
Fed is "stepping up" research and public discourse on the year, PayPal introduced Checkout with Crypto, allowing
role of central bank digital currencies (CBDCs)—that is consumers to pay merchants using cryptocurrencies.
cryptocurrencies backed by the Fed. As a first step, the Checkout with Crypto appears alongside other methods
Fed plans to publish a "discussion paper" this summer that in a consumer's PayPal wallet and can be used when they
lays out its thinking, with a focus on benefits and risks, have sufficient crypto balances. Merchants can accept
she said. crypto payments with no additional fees or integrations,
PayPal said.
Additionally, the Federal Reserve Bank of Boston is
building a hypothetical digital currency platform with Dan Schulman, PayPal president and CEO, said he
help from the Massachusetts Institute of Technology. And sees Checkout with Crypto "driving mainstream
the Atlanta and Cleveland Fed Banks are exploring how adoption of cryptocurrencies." He added that enabling
CBDCs can bolster financial inclusion. About 5 percent "cryptocurrencies to make purchases at businesses around
of American households are unbanked, according to the the world is the next chapter in driving the ubiquity and
Federal Deposit Insurance Corp.; about 20 percent are mass acceptance of digital currencies."
underbanked. Patti Murphy is senior editor at The Green Sheet and self-described
payments maven of the fourth estate. Follow her on Twitter @GS_
PayMaven.
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