Jerome Powell, the Federal Reserve chairperson, recently shared some positive remarks about the stablecoins. He was testifying in front of the US congress for his renomination hearing last week. During the hearing, he commented briefly on the matter of CBDC and stablecoins co-existing in the financial markets.
Stablecoins have become the top discussed topic among financial regulators recently. According to Powell’s latest remarks, the stablecoins can co-exist alongside the central bank digital currencies or CBDCs. The latest statement by Powell is a big improvement from his past pessimistic approach to the topic.
Pat Toomey is a Republican Senator who has been a vocal cryptocurrency advocate. He directed the question of stablecoins future in the United States during the congress hearing. Toomey specified whether Federal Reserve would bar the sufficiently regulated and privatized stablecoins. In response, Jerome Powell claimed that Fed has no such plans.
The new remarks are considered much less hawkish in comparison to last year. In July 2021, Powell claimed that CBCD’s main directive was to substitute cryptocurrencies completely. He also emphasized the replacement of stablecoins with CBDCs. However, despite the stringent remarks Federal Reserve has refrained from imposing a crypto exodus in a country like China.
Recently, Maxine Waters claimed that stablecoin could be a threat to the existence and valuation of fiat currencies in the United States. Powell, on the other hand, has maintained that he wanted to take his time to make the best decisions on the matter. The silence from Federal Reserve has allowed projects like Tether, USDC, and Pax to operate without any legal obstruction.
Meanwhile, the biggest concern connected with Federal Reserve policies is still the rising inflation. The current inflation rates have exceeded to highest for the first time in 40 years. Powell recently claimed that the economy has become so independent that it can keep operating effectively without accommodative policies. On the other hand, a considerable increase in interest is highly anticipated to address the issue.