Federal Reserve Vice Chairman: US Far from Making Decision on CBDC
The U.S. Federal Reserve Vice Chairman explains that the country is still in the basic research phase for a central bank digital currency (CBDC) and highlights concerns about stablecoin issuance without strong federal oversight.
Posted 2 months ago in Blockchain
The U.S. is far from making any decision on a central bank digital currency (CBDC), said Federal Reserve Vice Chairman Michael Barr, who described the Fed as still being in the “basic research” phase.
“Investigation and research are very different from decision making about next steps in terms of payments system development, and we are a long way from that,” Barr said Friday at a Federal Reserve Bank of Philadelphia event, adding that the research is still looking at the “system architecture” and tokenization models.
And even if it had completed its research, Barr said it wouldn’t make any move without “clear support from the executive branch and authorizing legislation from Congress.” Such a bill would have to clear a divided Congress, and the idea of a digital dollar has already drawn sharp criticism from Republican lawmakers.
Barr also underlined the need for Congress to come up with answers on stablecoins – the crypto sector’s tokens tied to steady assets such as the dollar.
“I remain deeply concerned about stablecoin issuance without strong federal oversight,” he said. “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.”
Meanwhile, the Fed has also recently launched its FedNow real-time payments network. Some supporters of FedNow have suggested it could compete with the features offered by stablecoins.
Barr said the program has so far had limited use. “While current volumes on FedNow are small, I expect that participation will grow over time,” he said.
Last updated 9/9/2023, 5:12:05 PM
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