for release on delivery 4 : 10 p. m. est ( 1 : 10 p. m. local time ) february 5, 2020 the digitalization of payments and currency : some issues for consideration remarks by lael brainard member board of governors of the federal reserve system at the symposium on the future of payments stanford graduate school of business stanford, california february 5, 2020 i want to thank darrell duffie for inviting me to discuss the future of payments. 1 digitalization is enabling consumers and businesses to transfer value instantaneously, technology platforms to scale up rapidly in payments, and new digital currencies to facilitate these payments. by transforming payments, digitalization has the potential to deliver greater value and convenience at lower cost. but there are risks. some of the new players are outside the financial system ’ s regulatory guardrails, and their new currencies could pose challenges in areas such as illicit finance, privacy, financial stability, and monetary policy transmission. given the stakes, the public sector must engage in order to ensure that the payments infrastructure is safe as well as efficient and fast, assess whether regulatory perimeters need to be redrawn or new approaches are needed in areas such as consumer data and identity authentication, and explore the role of central bank digital currencies in ensuring sovereign currencies stay at the center of each nation ’ s financial system. these issues are complicated and consequential. i will only touch on them today in the spirit of sketching out an agenda for the public sector along with the private sector and research community. digital players technology firms — from bigtechs to fintechs — are driving the digital transformation of payments. not only are the new players bringing innovation to the way payments are made between businesses and consumers and peer - to - peer, but they are bringing new business models that bundle payments with other activities in novel ways. payments have traditionally been a service provided by trusted intermediaries such as banks. the operations of banks and some related financial service providers, such as card i am grateful to paul wong and jacqueline cremos of the board of governors of the federal reserve system for their assistance in preparing this text. these remarks represent my own views, which do not necessarily represent those of the board of governors or the federal open market committee. companies, are subject to regulatory oversight for sound risk management. banks offer important consumer protections, including deposit insurance, error resolution, and fraud protection. in addition to providing payments services, banks generally provide

. beyond that, the widespread introduction of floating exchange rates at least in principle provides a shock absorber that makes policy coordination less important than in a fixed - rate world. provided that currency swings are modest and do not introduce their own instabilities, we should get specific about the exact gains from coordination in the modern world. getting specific involves you researchers. these are some of the questions that might come up in a conference such as this, today and in the future. there might well be more questions, but this is already a very rich agenda. but you researchers should not limit yourselves to the questions that we policymakers might ask. we will be confronting policy questions and asking for your help. you should also be confronting questions and dealing with them. in the end, we should hope that a common and open research forum like this one will become a significant development in the evolution of monetary policy, on all continents. here's hoping for a successful enterprise, and here's a challenge for you to make it a successful enterprise.