Fed Vice Chair Barr provides CBDC research update and highlights stablecoin legislation

In a recent speech at the Philadelphia Fed’s fintech event, Federal Reserve Bank Vice Chairman Barr discussed the role of the central bank in financial innovation. He emphasized that the Fed’s focus is on research and supervision, with a mention of the FedNow Service.

Researching Central Bank Digital Currency (CBDC)

Barr provided an overview of the Fed’s current focus on CBDC research, highlighting the importance of conducting foundational research. This research aims to support the development of a CBDC payments backbone and improve the existing payments system. Barr specifically mentioned the exploration of system architecture for recording transactions and ownership in ledgers and tokenization models.

The Fed also published a FEDS Notes publication on wholesale CBDCs, underscoring that tokenized platforms can coexist with existing central bank money functioning as a settlement asset.

Fed’s Novel Activities Supervision Program

Barr reminded the audience about the Fed’s novel activities supervision program, which was introduced last month. This program allows federally supervised banks to obtain written supervisory non-objection for novel activities, including those involving stablecoins. This aligns with the policies outlined in interpretative letters 1174 and 1179 from the Office of the Comptroller of the Currency (OCC).

Barr emphasized the Fed’s interest in strong federal oversight of stablecoins, as they rely on the trust of the central bank due to their pegged value to the U.S. dollar. He expressed appreciation for current legislative efforts that aim to mitigate risks to financial stability, monetary policy, and the U.S. payments system.

FedNow Service and Instant Payments

Barr highlighted that the Fed has provided the necessary infrastructure for 24-hour instant payments through the FedNow Service. This service is available to large banks, regional banks, community banks, and credit unions. While current volumes are small, it is up to the depository institutions to make this service widely accessible.

Editor Notes: Uber Crypto News Supports Crypto Education and Awareness

It’s encouraging to see the Federal Reserve actively engaging in research and supervision regarding CBDCs and stablecoins. As the crypto industry continues to evolve, it’s crucial to have regulatory frameworks in place to safeguard financial stability and protect consumers.

For the latest news and updates on the crypto market, including CBDC developments, stablecoin regulations, and other exciting trends, visit Uber Crypto News. Stay informed and make educated decisions about your crypto investments.