According to The Block’s report, senior Federal Reserve official Michael Barr expressed deep concerns about the lack of federal oversight regarding stablecoins in comments he made on Friday. The U.S. central bank had decided to tighten regulation on stablecoin activities last month, and Barr emphasized the significance of this step.
“I have deep concerns that if unregulated stablecoins are widely used as a means of payment and store of value, they could pose serious risks to financial stability, monetary policy, and the U.S. payment system.”Michael Barr
He also highlighted the potential impact of such usage on the financial system, stating, “I believe it is critical to establish a legal and regulatory framework before significant risks emerge.”
Support for Federal Regulation
However, Barr noted their appreciation for Congress’s efforts on this crucial issue and expressed support for a comprehensive federal regulation for stablecoins. He emphasized the importance of bringing stablecoins under regulatory oversight, saying, “We look forward to more engagement.”
Lastly, addressing the Federal Reserve’s work on central bank digital currency (CBDC), Barr stated, “I must note that we are not currently developing a CBDC at the Federal Reserve. Our current focus is on regulating stablecoins and preserving the stability of the financial system.”