Michael S. Barr was confirmed as the Vice Chair of the Federal Reserve for Supervision, after being nominated by the Biden Administration in July of this year.
He is a member of the Federal Reserve Board of Governors. This new title for Barr was established after serving under former President Obama as the assistant secretary of the treasury for financial institutions.
On Wednesday, he gave his first public speech since taking the position, laying out his proposed agenda at the Hutchins Center on Fiscal and Monetary Policy at Brookings Institute. The focus of this speech was on making the financial system safer and fairer.
One of the main issues on Vice Chair Barr’s agenda has to do with cryptocurrencies. He wants to regulate these currencies. In his speech he specifically mentioned Stablecoins, cryptocurrencies that attempt to peg their market value to some external source. Barr said that these, and other unregulated private money, could cause risks to financial stability. In his speech, Barr stated,
“History shows that in the absence of appropriate regulation, private money is subject to destabilizing runs, financial instability, and the potential for widespread economic harm.”
Before banks were regulated, there were several financial crises caused by this lack of stability. Barr called for multiple regulatory agencies to work together in order to pass legislation on the subject as soon as possible.
Another potential issue Barr addressed in his speech is financial issues related to climate change. Banks have their eyes on how this environmental concern will affect their bottom lines. The Federal Reserve is currently looking into the risks posed by climate change and has been more vocal about this in recent times.
Barr is intending to work with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation in order to give banks better guidance on how to handle these issues.
The goal according to Barr’s speech is to “provide guidance to large banks on how we expect them to identify, measure, monitor, and manage the financial risks of climate change.” Next year, there will be a program to assess the long-term risks of climate change on larger institutions.
He went on to speak about fairness in financial institutions as well. The first way to increase fairness is through ensuring banks use financial capability, which involves price transparency in order to enable buyers to make more informed choices.
Another way to promote fairness is by ensuring access to low-cost and safe banking services for people with low to moderate income, using methods such as fast digital payments. The last way Barr mentioned is consumer protection, which will be accomplished via supervision and regulation of business practices.
In his new position, Barr intends to work with the Board of Governors, as well as other agencies, in order to ensure that the Federal Reserve is encouraging fair, equitable practices, and ensuring the financial success of America’s large corporations.