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 alternate options resembling 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 which may be the case and I feel that’s one of many arguments which are provided in favour of digital foreign money,” Powell stated throughout a listening to earlier than the US Home of Representatives Monetary Companies Committee. “That, specifically, you wouldn’t want stablecoins, you wouldn’t want cryptocurrencies for those who had a digital US foreign money – I feel that’s one of many stronger arguments in it’s favour.”
Fed officers might be broadly inspecting the digital funds universe in a dialogue paper that may very well 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 difficulty its personal digital foreign money.
Powell stated he was sceptical that crypto belongings would change into a major funds automobile in america however stated stablecoins would possibly achieve extra traction. Nevertheless, he stated extra regulation is required earlier than stablecoins may tackle an even bigger function within the monetary system.
“We now have a fairly sturdy regulatory framework round financial institution deposits, for instance, or cash market funds,” Powell stated. “That doesn’t exist at the moment for stablecoins, and in the event that they’re going to be a big a part of the funds universe – which we don’t suppose crypto belongings might be however stablecoins is perhaps – then we want an applicable regulatory framework.”