Fed's Barr says central bank 'a long way' from any decision on issuing digital currency – Reuters

WASHINGTON, Sept 8 (Reuters) – The U.S. Federal Reserve’s chief regulator said on Friday that the central bank was “far away” from deciding whether to issue its own digital currency, urging the government to It added that it would not issue without the public support of Washington.

Fed Deputy Chairman of Oversight Michael Burr said officials are investigating central bank digital currencies (CBDCs), but the Fed is far from making a decision. He added that it would only proceed with the president’s “clear endorsement” and congressional approval of the bill.

“In my view, the Federal Reserve, as the issuer of U.S. currency and operator of the payment system, needs to understand these developments and trade-offs.” [CBDCs] In remarks prepared at a fintech conference in Philadelphia, Barr said, “Of course, research and research are very different from decision-making about next steps in payment system development, and we’re a long way from that. .”

Barr’s comments echo those of Federal Reserve Chairman Jerome Powell, who also said the Fed would not move to issue digital currency without explicit Congressional approval. Says. The concept of such a currency has been met with skepticism by the banking industry and some lawmakers wary of giving the Fed so much power.

On the issue of digital currencies issued outside public institutions, Barr said he remained “deeply concerned” about so-called stablecoins gaining a strong foothold in the financial system without significant oversight. .

Stablecoins, digital assets whose value is intended to be pegged to currencies such as the U.S. dollar, have drawn the attention of regulators and legislators as they lack adequate regulatory framework and oversight. are collecting.

Barr said banks interested in handling these assets should allow their regulators to do so, and regulators will ensure that firms have adequate risk management in place to handle these new products. said he would.

But he warned that the Fed’s policy on this only applies to banks that it directly supervises, leaving room to go even further for banks that are subject to oversight by other government agencies.

“If non-federally regulated stablecoins 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’s important to have a proper grasp of the legislative and regulatory framework before any significant risks arise,” he said.

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