NEW YORK: Federal Reserve Chair Jerome Powell on Wednesday (Jul 14) stated one of many stronger arguments for the US central financial institution to arrange a digital foreign money is that it may undercut the necessity for personal options equivalent to cryptocurrencies and stablecoins.
Requested throughout a congressional listening to if having a digital foreign money issued by the Fed can be a extra viable different than having a number of cryptocurrencies or stablecoins emerge within the funds system, Powell stated he agreed.
“I feel that could be the case and I feel that’s one of many arguments which might be provided in favour of digital foreign money,” Powell stated throughout a listening to earlier than the US Home of Representatives Monetary Providers Committee. “That, particularly, you wouldn’t want stablecoins, you wouldn’t want cryptocurrencies in the event you had a digital US foreign money – I feel that’s one of many stronger arguments in it’s favour.”
Fed officers shall be broadly inspecting the digital funds universe in a dialogue paper that could possibly be launched in early September, Powell stated. He described it as a key step that accelerates the Fed’s efforts to find out if it ought to situation its personal digital foreign money.
Powell stated he was sceptical that crypto belongings would develop into a essential funds automobile in the USA however stated stablecoins may acquire extra traction. Nevertheless, he stated extra regulation is required earlier than stablecoins may tackle a much bigger position within the monetary system.
“We’ve a fairly sturdy regulatory framework round financial institution deposits, for instance, or cash market funds,” Powell stated. “That doesn’t exist presently for stablecoins, and in the event that they’re going to be a big a part of the funds universe – which we don’t assume crypto belongings shall be however stablecoins may be – then we want an acceptable regulatory framework.”