Barr Backs Away from CBDC, Stands Firm vs. Stablecoins
FRB Vice Chair Barr today for the first time sided firmly with Chair Powell in approaching CBDCs with caution, if at all. Mr. Barr also emphasized not only that the Fed will not proceed with a CBDC without Executive Branch approval, but also now says that it would require “authorizing legislation,” not just Congressional “approval.”
Examining CBDC and Wholesale Payments
The FDIC today released an internal – but not necessarily independent – review of First Republic’s failure, largely saying that FDIC supervisory staff could have done better identifying emerging risks without strongly criticizing actions ahead of the bank’s collapse. This is blamed on factors evident at the time: e.g., rapid growth, poor liquidity and interest-rate risk management.
Fed Study: CBDC Unnecessary for Successful Wholesale Tokenization
As JPMorgan and other companies continue to advance wholesale digital payments and Chair Powell has suggested (see Client Report FEDERALRESERVE73) that he may be open to wholesale CBDC, a new Fed staff study finds that tokenized wholesale payment systems do not require a new form of central-bank money.