Fed’s Micheal Barr Pushes For Stablecoin Regulation
In a recent statement, the U.S. Federal Reserve’s vice chair of supervision, Michael Barr, spoke about several other aspects of stablecoins, Central Bank Digital Currencies (CBDCs), and the need for Federal oversight.
According to Barr, the payment systems in the U.S. need to meet fundamental principles. The Federal Reserve has an essential role as the supervisor and payment operator.
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Support For Responsible Innovation
In his statement, Barr emphasized the importance of ensuring the continued safety and efficiency of the U.S. payment systems with the ongoing innovations in the finance industry.
Talking about the potential of CBDCs, Barr spoke about the Federal Reserve’s active efforts in implementation of the centrally monitored cryptocurrency.
However, he also made it clear that the Feds have yet to decide on the issuance of CBDCs. The issuance will require support from the executive branch and congressional authorization.
Speaking about stablecoins, Barr emphasized that he remains concerned about the issuance of stablecoins without strong Federal oversight.
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The Stablecoin Conundrum
Barr says, “When an asset is pegged to a government-issued currency, it is a form of private money. When that asset is also used as a means of payment and a store of value, it borrows the trust of the central bank.”
According to Barr, the Federal Reserve has previously issued guidance on the process for Fed-supervised banks to seek a non-objection before dealing with “dollar tokens.”
The guidance aims to provide clarity for banks engaging with stablecoins while ensuring that banks have proper risk management systems and cybersecurity measures in place.
“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.” Micheal Barr.
Looking ahead, Barr said the Federal Reserve will continue to explore new technologies to advance payment systems, which involves the continuous study of ledger technology.
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