The United States Federal Reserve Chair Jerome Powell said on Wednesday that he does not see cryptocurrencies as a concern for the financial stability in the United States.
Powell spoke at a press conference after the Fed’s two-day meeting, where the FOMC reiterated a faster tapering and announced a potential three interest hikes in 2022. By explaining that crypto assets are largely speculative and “not backed by anything”, Powell said to believe there is no risk for these assets to disrupt the financial system. He did note however that consumers need to be aware of the risk of investing in these volatile assets.
“I don’t see them [crypto] as a financial stability concern at the moment.”
On Wednesday, Powell also commented on stablecoins and said that while they could become part of the monetary system, regulation of the asset is lacking and therefore needs to be ensured.
Nevertheless, Powell continued, the lack of proper regulation does not imply stablecoins cannot play an essential role in the economy. Should stablecoin development be linked to one of the Big Tech companies it could scale to become an “efficient consumer-serving [and systemically important] part of the financial system,” he said
Powell stressed the importance of a reliable payment network that acts in compliance with all the appropriate regulations. It is key, he said, by offering consumers the needed protection since they generally rely on authorities in matters as consumer safety and protection.
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