The Federal Reserve is “a long way” from choosing whether to continue with a reserve bank digital currency and would just do so with clear assistance from the executive branch and licensing legislation from Congress, Fed Vice Chairman for Supervision Michael Barr stated today. Speaking at a fintech conference in Philadelphia, Barr likewise stated he stays deeply worried about stablecoin issuance without strong federal oversight.
“Stablecoins are a form of money, and the ultimate source of credibility in money is the central bank,” Barr stated. “If non-federally regulated stablecoins were to become a widespread means of payment and store of value, they could pose significant risks to financial stability, monetary policy and the U.S. payments system. It is important to get the legislative and regulatory framework right before significant risks emerge.”
As for a CBDC, the Fed continues to speak with a broad variety of stakeholders and perform standard research study in emerging innovations that may support a structure for the currency, Barr stated. However, he worried that examination and research study are not the very same thing as choosing whether to really provide a CBDC. “Given the importance of this infrastructure, investigating the potential opportunities, risks and tradeoffs for payments innovation is just one way the Fed fulfills its role in supporting the responsible innovation that enables a safe and efficient U.S. payments system,” he stated.
Barr likewise spoke briefly about the brand-new unique activities guidance program the Fed introduced last month to manage bank activities in digital properties and nonbank collaborations. Many banks that participate in such activities are currently doing so securely and peacefully, however “other institutions have some learning to do,” he stated throughout a Q&A. “This team of experts will work with local supervisors on the ground to make sure our institutions have access to that expertise, access to that clarity and timely and expert judgment.”