Mr. Barr said the Fed has conducted "basic research" into technologies that might support a CBDC, as "investigating the potential opportunities, risks and trade-offs 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."
Last month, the Federal Reserve established a Novel Activities Supervision Program to focus on overseeing risks posed by new, technology-driven activities at banks, which includes "crypto assets, distributed ledger technology and complex technology-driven bank partnerships with non-bank fintechs," Mr. Barr said.
"Our aim is to provide clarity as well as timely and relevant feedback to the institutions we supervise," Mr. Barr added. "We want them to continue to do the work to take advantage of innovations, while also supporting their ongoing safety and soundness."
Mr. Barr said that stablecoins — digital tokens that aim to maintain a stable value often through pegging to an existing currency — are of particular interest to the Fed.
"The Federal Reserve has a strong interest in ensuring that any stablecoin offerings operate within an appropriate federal prudential oversight framework, so they do not threaten financial stability or payment system integrity," he said.
Mr. Barr said it's "important to get the legislative and regulatory framework (for stablecoins) right before significant risks emerge," and the Fed appreciates the work Congress has done on the issue.
In July, the House Financial Services Committee advanced a bill, known as the Clarity for Payment Stablecoins Act of 2023, in an effort to provide a clear regulatory framework for the issuance of stablecoins.