The payments landscape for community banks is changing rapidly as traditional payments converge with new instant payment systems and emerging cryptocurrencies. It is critical for Community Banks to maintain awareness of developments in the payments space to assess new opportunities, mitigate risks, and ensure that their payment strategy aligns with overall business plans.
House Financial Services Committee Republicans released principles to guide Congress in evaluating potential proposals for a U.S. central bank digital currency.
Details: The principles say any U.S. CBDC should:
Maintain the dollar as the world’s reserve currency.
Maintain the preeminence of the U.S. payment system.
Not impede stablecoin development.
Support digital currency policies that promote private-sector innovation.
Ensure privacy and security protections.
Next: With policymakers debating CBDC and digital asset oversight, committee Democrats continue developing their own policy views of CBDC while the Federal Reserve works on a U.S. CBDC paper.
Stablecoins: Separately, the Financial Stability Oversight Council met to discuss, among other things, a President’s Working Group report on stablecoins, which recommended bank-like rules for stablecoin issuers. ICBA recently said it supports the group’s efforts to support a consistent federal regulatory framework.
More: Recent ICBA blog posts detail where nations stack up in developing CBDCs, growing stablecoin risks to consumers and the financial system, how policymakers are responding, and what decentralized finance means for community banks.