Jerome Powell (Federal Reserve Chairman) said that crypto currencies are not considered a threat to financial stability. However, he noted that they are risky and “there’s big consumer issues for consumers who may or may not understand what they’re getting.”
Fed Chair Powell says Cryptos are Risky, but Not A Financial Stability Concern Currently
In a Wednesday press conference, Jerome Powell, Fed Chairman, spoke about cryptocurrency. Commenting on whether cryptocurrencies are a threat to the country’s financial stability, he said:
I don’t see them as a financial stability concern at the moment. These are very risky. They’re not backed by anything.
“I think there’s big consumer issues for consumers who may or may not understand what they’re getting,” Powell continued, adding that “There are certainly developments in the markets that are worth following, which are really not in our jurisdiction.”
Powell also addressed stablecoins. He noted that he supports the view expressed in the President’s Working Group’s report, which recommends stablecoin issuers be regulated like banks.
Noting that “Stablecoins can certainly be a useful, efficient consumer-serving part of the financial system if they’re properly regulated,” the Fed chair stressed that “Right now, they aren’t.” Powell concluded:
If they can be linked to one of the many large technology networks, the possibility is that they will scale.
This week, the Bank of England issued a financial stability report stating that crypto assets “currently pose limited direct risks to UK financial stability.” However, the report warns that “they will present a number of financial stability risks if they continue to grow at their current rapid pace, and as they become more interconnected with the wider financial system.”
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