- Jerome Powell transitions his opinions about stablecoins over the year, hinting at the possibility of Federal Reserve issued CBDC.
- Powell also presents suggestions about CBDCs and stablecoins existing side-by-side, and when questioned about the CBDC preventing the existence of privately issued stablecoins, Powell denied.
- Powell also said that he would do this right instead of doing it fast. Also, the Federal Reserve would work over increasing inflation which reached a 40-year high, and increasing rates would be Fed’s priority.
Jerome Powell, the chairman of the Federal Reserve, recently had his renomination hearing in which he discussed problems concerning inflation, CBDC’s and stablecoins. While testifying in front of the US congress, it was observed that Powell had switched some of his earlier opinions about the relationship among CBDCs & stablecoins and explained his suggestion about the possibility of both of them coexisting without creating a need of replacing one another.
The hearing of Jerome Powell took place on Tuesday, where he presented the likelihood of a CBDC (Central Bank Digital Currency) issued by the Federal Reserve. A well-known cryptocurrency advocate, Republican Senator Pat Toomey, asked Powell that whether the existence of privately issued stablecoins that are regulated well enough would be prevented by a CBDC that Federal Reserve issues. Powell, in response, said, not at all.
CBDC Could Replace Crypto!
It should be noted that this response of Powell demonstrates a far less aggressive attitude for stablecoins than he used to have in the past year. Last year, around July, also explained that a significant benefit of CBDC could be to replace the cryptocurrency, including stablecoins as well. However, Powell has clarified that he does not have any intentions to ban cryptocurrencies right away and that he wants to keep a different US regulatory attitude from China.
Despite everything, the fact can’t be ignored that stablecoins have been a hot topic among the regulators and regulatory authorities for a while now. In a hearing over the past month, several congresspeople and industry leaders had discussed various conflicting points of view on stablecoins. However, the industry looks at stablecoins as a compliment to the financial system. On the other hand, many believed that stablecoins might be classified as securities. Even Maxine Waters, an American politician serving as US representative for California’s 43rd congressional district, hinted that stablecoins could be a major threat to the US dollar.
Upcoming Report On CBDC Implementation
Some of the other questions also emerge that if a CBDC existed in the first place, what practical use would privately issued stablecoins have. Although, observing a CBDC being issued yet is far away in the future. Sometime earlier, Powell said that he would prefer to do this right instead of doing it fast and would leave space for USDC, Tether, and PAX to operate and function in its absence. The Federal Reserve has planned to publish a report in the upcoming few weeks, which will discuss the pros and cons of implementing a CBDC.
However, stablecoins were not the broadly discussed topic in the hearing, it was inflation, which is now the Federal Reserve’s first priority as inflation reached the 40-year high around November 2021. Inflation growing more than expected led Powell to say that the economy does not need highly accommodative policies anymore, which we already have in place at present. Powell also went ahead to hint that the Federal Reserve will make their priority to increase rates for fighting this inflation issue very soon
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.