Fed Barr Finally Opens Up About Digital Currencies By Central Banks!

<p>&nbsp;A key Federal Reserve official said on Friday that the central bank was still "far away" from making any decision on whether or not to issue its own digital currency, adding that they would not do so without official support in Washington.</p><p><br /></p><p>The Fed's Vice Chancellor for Regulation, Michael Barr, said that although officials are looking into central bank digital currency (CBDC), the Fed is still far from making any decisions. He added that they would only proceed with one with "clear support" from the president and legislative approval from Congress.</p><p><br /></p><p>"In my view, as the issuer of United States currency and operator in the payment system, the Federal Reserve should understand this development and the reciprocity of CBDC," Barr said in a speech prepared for a fintech conference in Philadelphia.</p><p><br /></p><p><br /></p><p>Barr's comments echo the views of Fed Chairman Jerome Powell, who has also said that the Fed will not take action to issue digital currencies without express authorization from Congress. The idea of a digital currency has been met with skepticism by the banking industry and some members of Congress, who are wary of giving the Fed a green light.</p><p><br /></p><p>Regarding digital currencies issued by unofficial agencies, Barr said he remains "very concerned" about stablecoins finding a place in the financial system without adequate oversight. Stablecoins, which are digital assets whose value is pegged to currencies such as the US dollar, have drawn attention from regulators and members of Congress, who say the product lacks an adequate regulatory and oversight framework.</p><p><br /></p><p>Barr said banks interested in dealing in such assets must obtain approval from the financial supervisor, who will check to ensure the firms have adequate risk management to handle these new products.</p><p><br /></p><p>"If stablecoins not regulated by the Fed become a widespread means of payment and store of value, it could pose a significant risk to the financial stability, monetary policy, and payment system of the United States. It is important to get the legal and regulatory framework right before significant risks emerge," he said.</p>