The Federal Reserve's Michael Barr called for a strong framework for stablecoins amid concerns about their reliance on the central bank.
Michael Barr, vice chair of the Federal Reserve for supervision, called for a strong federal framework for stablecoins amid concerns that private entities are essentially creating private money.
"Private money needs to be well regulated," Barr said Tuesday at DC Fintech Week, adding that stablecoins that are linked to fiat currency, such as the dollar, borrow "the trust of the Fed." The central bank has increased its focus on stablecoins and in August announced new guardrails to strengthen its supervision of banks involved in stablecoin activity. Barr said last month that he was "deeply concerned" about issuing stablecoins without strong federal oversight.Lawmakers within the House Financial Services Committee advanced a stablecoin bill over the summer to regulate those assets. That came with a few sticking points, however, such as disagreement from Rep.
Waters told Politico last week that she expects talks on that stablecoin bill to start back up. Barr said on Tuesday that it would be better if Congress takes a role. The central bank published a report last year to examine the pros and cons of a potential CBDC. Barr said no decision has been made on whether the central bank would issue one.
The Fed would only create a retail CBDC if Congress and the executive branch "clearly authorized us to do that," Barr said. Retail CBDCs are meant for consumer use, and some have said they could be a complement to cash, though not replace it. "We're very focused on research questions," Barr said. © 2023 The Block. All Rights Reserved. This article is provided for informational purposes only.
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