Federal Reserve Bank Vice Chairman Discusses Central Bank’s Role in Financial Innovation


This article has been republished with permission from Binance News.

According to Cointelegraph, the Federal Reserve Bank vice chairman spoke at the Philadelphia Fed’s fintech event on September 8, discussing the central bank’s role in financial innovation. Research and supervision were highlighted, along with a mention of the FedNow Service.

The vice chairman provided an overview of the Fed’s current focus on central bank digital currency (CBDC) research, characterizing it as basic research that might support a CBDC payments backbone or other purposes in the existing payments system. System architecture for recording transactions and ownership in ledgers, as well as tokenization models, were specifically mentioned.

The vice chairman also reminded the audience of the Fed’s novel activities supervision program, introduced last month, which allows federally supervised banks to obtain written supervisory non-objection to their novel activities involving stablecoins, among other things. This activity aligns with Office of the Comptroller of the Currency (OCC) policies outlined in interpretative letters 1174 and 1179. Strong federal oversight of stablecoins is in the interest of the Fed, as a dollar-pegged stablecoin borrows the trust of the central bank.

Lastly, the FedNow Service, introduced in July, was mentioned as a way for large banks, regional banks, community banks, and credit unions to access 24-hour instant payments. The vice chairman noted that current volumes of the service are small, but it is up to the depository institutions to make the service available.

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