(MENAFN- CoinXposure)
On September 8, the vice chairman of theFederal Reserve Bank discussed the role of the central bank in financial innovation at a Philadelphia Fed fintech event. The quick response made a nod to the FedNow service and focused on research and supervision.
Barr offered an outline of the Fed's“current focus” on central bank digital currency (CBDC) research along with the traditional caution that it makes no judgments without Congressional permission.
The basic study, in his words,“could support a CBDC payments backbone or for other purposes in the existing payments system,” is what he called it.
Barr specifically emphasized tokenization approaches and system design for logging ownership and transactions in ledgers.
The same day, a FEDS Notes article on wholesale CBDC made a point of stating that“the technology associated with tokenized platforms is not incompatible with existing central bank money functioning as a settlement asset.
Barr cited the Fed's Novel Activities Supervision Program, which was unveiled just last month, in front of his audience.
A federally regulated bank may receive“written supervisory non-objection” to its unique actions employing stablecoins, among other things, if it receives input from that committed team of supervisors.
According to Barr, the OCC regulations established in Interpretative Letters 1174 and 1179 are following this action.
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A dollar-pegged stablecoi“borrows the trust of the central bank,” as stated in the OCC letters, therefore, strict federal regulation of stablecoins is in the Fed's best interests, according to Barr. He stated:
He said he appreciated the present legislative initiatives . In July, the Fed launched the FedNow Service, which provided large banks, regional banks, community banks, and credit unions with the means for widely available 24-hour rapid payments.
Despite the service's low present volume, he continued, the depository institutions are responsible for making it available.
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