The U.S. Federal Reserve Vice Chairman, Michael Barr, announced that the country is still far from making a decision regarding the creation of a central bank digital currency (CBDC) due to being in the early research stage. The Fed needs congressional legislation to legitimize a CBDC, according to Barr’s comments at a Federal Reserve Bank of Philadelphia event. Barr claimed that the research aims at the system architecture and tokenization models and is different from decision-making on the payment system.
Even if the Federal Reserve completed its research on CBDC, Barr stated that no move would be made without "clear support from the executive branch and authorizing legislation from Congress." Notably, any bill regarding a digital dollar would require clearance from a divided Congress, while the concept already confronted criticism from Republican lawmakers. While discussing the tokenization models, Barr demonstrated his concern about stablecoins, stating the importance of Congress taking action and addressing the financial risks they could pose.
Lastly, the Federal Reserve had launched its real-time payments network, FedNow. The program that is believed to compete with the features offered by stablecoins has yet to gain significant interest, with Barr adding that "participation will grow over time," although current volumes remain relatively small.
