Federal Reserve and BOE Enhance CBDC Research, Highlight Importance of Stablecoin Regulation
Summary:
The Federal Reserve Board is intensifying its research into a central bank digital currency (CBDC), focusing on end-to-end system architecture, including ledgers, tokenization and custody models, according to vice-chair Michael Barr. Meanwhile, the deputy governor of the Bank of England (BOE), Sir Jon Cunliffe, noted that no decision has been made on a CBDC in the UK, but a consultation paper suggests a Digital Pound might be necessary by the end of the decade. Both Barr and Cunliffe highlighted the importance of stablecoin regulation.
The Federal Reserve Board is deepening its exploration of a potential central bank digital currency (CBDC), delving into relevant tech advancements, according to vice chair Michael Barr on October 27. He also mentioned stablecoins during his talk at the Economics of Payments XII Conference, where the deputy governor of the Bank of England (BOE) Sir Jon Cunliffe delivered his final address. The focus of the Fed's research is now predominantly on "end-to-end system architecture," which includes ledgers, tokenization, and custody models for an intermediated CBDC, noted Barr in Washington. While recognizing the requirement of congressional approval for a digital dollar, Barr stressed the significance of learning from national and international experiments to inform decision-making about fostering responsible innovation.
Barr's statements may spark thoughts of Representative Tom Emmer's plea to cease the Fed's "vague" CBDC research, brought up in the House of Representatives in September. Meanwhile, Cunliffe, nearing the end of his decade-long term on October 31, emphasized at the conference that there had been no decision yet regarding a CBDC in the UK. He referred to a consultation paper published in February, saying it suggested that the evolving trends and technological leaps in payments might necessitate a Digital Pound by the decade's conclusion.
An impressive 50,000 responses were received to the consultation paper, with the major areas of concern being privacy, programmability, and cash's diminishing use, Cunliffe shared. He further jokingly pointed out that criticisms ranged from fears of a Digital Pound destabilizing the financial system and becoming redundant, to it being a ‘solution seeking a problem.’ He suggested a future where private firms might incorporate the Digital Pound as a settlement asset into the services they provide to wallet users. The BOE's response will be made in the subsequent months, he stated.
Both Cunliffe and Barr also spotlighted stablecoin regulation. Cunliffe assured that BOE will soon publish a discussion paper on the issue, while Barr called for regulatory measures, citing that this kind of asset "leverages the credibility of the central bank.
Published At
10/27/2023 5:14:21 PM
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