September 8, 2023 at 15:50 GMTModified date: September 8, 2023 at 15:50 GMT
September 8, 2023 at 15:50 GMT

CBDC decision still a ‘long way’ off says Fed vice chair

The US is nowhere near making a decision on introducing a CBDC, according to the Federal Reserve vice chairman Michael Barr.

CBDC decision still a ‘long way’ off says Fed vice chair

The United States is nowhere near making a decision on implementing a central bank digital currency (CBDC), according to the Federal Reserve vice chairman Michael Barr.

“Investigation and research are very different from decision making about next steps in terms of payments system development, and we are a long way from that,” Barr said today at a Federal Reserve Bank of Philadelphia event.

He added: “As the pace of innovation increases, the payments landscape continues to evolve with the emergence of new programmable payments platforms, including those built on distributed ledger technology and blockchain technology, and new forms of digital assets, such as cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs). 

“We continue to speak to a broad range of stakeholders and conduct basic research in emerging technologies that might support a CBDC payments backbone, or for other purposes in the existing payments system.

“For example, the Fed’s CBDC research program is currently focused on system architecture, notably how ledgers that record ownership of and transactions in digital assets are maintained, secured, and verified, as well as tokenization models — that is, the design of the digital analog to the paper bank note that permits a transfer of value between two parties without direct facilitation by the issuing central bank.

“The Federal Reserve has made no decision on issuing a CBDC and would only proceed with the issuance of a CBDC with clear support from the executive branch and authorizing legislation from Congress. Given the importance of this infrastructure, investigating the potential opportunities, risks, and tradeoffs for payments innovation is just one way the Fed fulfills its role in supporting the responsible innovation that enables a safe and efficient U.S. payments system.”

He concluded: “Looking ahead, we will continue to engage in exploring new technologies, including those that could be used to further advance our provision of payments rails.”

The future of CBDCs

survey in July by the Bank of International Settlements (BIS) projected that there will be 15 retail and nine wholesale CBDCs by 2030. The survey also revealed a substantial surge in interest from central banks, with a 93% growth observed last year.