On Tuesday, the Senate Banking Committee held a hearing on oversight of the Federal Reserve, during which the topic of a central bank digital currency played a prominent role.
Vice Chairman for Supervision Randal Quarles testified on behalf of the Fed. “I’m glad to see the Fed moving forward with issuing a report on central bank digital currencies,” said Senator Chris Van Hollen in one exchange. “Can you tell me whether or not the Fed would have the existing authority to launch a pilot if it so chose, or do you believe it would need congressional authority?”
Quarles responded that the study was designed to determine whether a CBDC is appropriate for the United States, which is, he said, “very much an open question.” However, “a broader pilot and certainly a CBDC itself is most likely to require additional authority,” according to Quarles.
Alongside CBDCs, digital assets came up in the context of financial inclusion and work on providing fintech firms with access to bank-like charters and services. Senator Cortez Masto asked about how emerging technologies and crypto firms can streamline services.
Quarles said: “In some cases, fintech firms are seeking to operate without banking partners. In some cases, they can operate more cheaply, which can raise inclusion, but raises questions as to how we think about those firms.”
Senator Lummis, meanwhile, asked Quarles for an update on the latest in digital asset regulation. In response, Quarles plugged the recently announced “sprint” that aims to get the Fed on the same page as other banking regulators, namely the Office of the Comptroller of the Currency and the FDIC.
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