NEW YORK: Federal Reserve Chair Jerome Powell on Wednesday (Jul 14) mentioned 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 comparable 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 mentioned he agreed.
“I feel that could be the case and I feel that’s one of many arguments which might be supplied in favour of digital foreign money,” Powell mentioned throughout a listening to earlier than the US Home of Representatives Monetary Companies Committee. “That, particularly, you wouldn’t want stablecoins, you wouldn’t want cryptocurrencies should you had a digital US foreign money – I feel that’s one of many stronger arguments in it’s favour.”
Fed officers will likely be broadly analyzing the digital funds universe in a dialogue paper that might be launched in early September, Powell mentioned. 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 mentioned he was sceptical that crypto belongings would turn into a most important funds automobile in america however mentioned stablecoins would possibly achieve extra traction. Nonetheless, he mentioned extra regulation is required earlier than stablecoins may tackle an even bigger position within the monetary system.
“We have now a fairly sturdy regulatory framework round financial institution deposits, for instance, or cash market funds,” Powell mentioned. “That doesn’t exist at the moment for stablecoins, and in the event that they’re going to be a major a part of the funds universe – which we don’t assume crypto belongings will likely be however stablecoins is perhaps – then we want an acceptable regulatory framework.”