In Brief:
- U.S. Federal Reserve Chairman Jerome Powell doesn’t view crypto as a financial stability concern.
- He does think crypto is risky since they are not backed by anything.
- Powell stated that stablecoins will most certainly play a role in the future if properly regulated.
U.S. Federal Reserve Chairman Jerome Powell commented that he doesn’t view crypto as a financial stability concern.
Powell stated this during a press conference, “I don’t see them [cryptocurrencies] as a financial stability concern at the moment. But things like the kind of leverage that that’s built into, and those sorts of things, is certainly worth watching.”
The Fed Chair expressed that he does think crypto is risky since they are not backed by anything. He believes there are significant concerns for those who may or may not grasp what they are getting into.
He added that stablecoins will most certainly play a role in the future, citing the President’s Working Group report, which recommended that Congress must establish new regulations requiring stablecoins to be issued by insured banks.
“Stablecoins can certainly be a useful, efficient consumer-serving part of the financial system if they’re properly regulated. Right now, they aren’t. They have the potential to scale, particularly if they were to be associated with one of the very large tech networks that exist,” Powell voiced out.
Powell also reminded that the people depend on the government, particularly the Federal Reserve, to ensure that the payment system is stable and safe.
The Federal Reserve has been considering the possibility of establishing a digital currency in the United States, though federal officials are divided on the subject and there is no set timeline for it to occur.
If it goes forward, a digital dollar might be accessed via mobile phones, reducing the use of more expensive and time-consuming electronic payments.
Jerome Powell, who served on the Federal Reserve’s board of governors since 2012 and as chairman since 2018, was nominated last month by US President Joe Biden to continue in the same post until 2026.
In October Fed Chair Powell stated that the U.S. government intends to regulate cryptocurrencies, but they do not intend to ban Bitcoin or other digital assets like China did previously.
