Fed Chair Jerome Powell Dismisses Cryptocurrencies as Financial Stability Concern but Warns They’re Risky
Federal Reserve Chairman Jerome Powell says that he does not see cryptocurrencies as a financial stability concern. 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 Currently Not a Financial Stability Concern
Fed Chairman Jerome Powell talked about cryptocurrency in a press conference Wednesday. 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. I do think they are 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 discussed 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:
They have the potential to scale, particularly if they were to be associated with one of the very large tech networks that exist.
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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